Not surprising. I always thought it'd be an easy sell for banks to charge someone money to secure their money. "It's safer than keeping it in your mattress; why wouldn't we charge you money for that?"
The banks lend depositor's money out for interest. The small amount of interest you get on your savings or money market account is "your share" of the profit they made lending your money to others.
If a bank wanted to charge me a fee, I wouldn't be willing to let them lend my money to others for a profit. I would just pay for a safety deposit box if I was worried about securing money and the bank was going to charge me to have a regular account.
Yes of course; in a world where you can make money from lending out money that's all perfectly reasonable. In a world where you can't, then the sales pitch must change. Or banks switch to more complex/risky financial instruments that may not be insured against loss.
Safety deposit boxes usually aren't insured (or if they are aren't insured for very much or against very much), so if it came to that I would recommend researching that before doing such a thing as storing your money in one.
There used to be banks that only charged a fee and did not invest the money. But those banks have either merged with bigger banks that care about their shareholders more, or have gone out of business to banks that are fractional reserve banking in nature.
The problem is, bank solvency is extremely volatile with fractional banking, and if it wasn’t for FDIC “guarantees” and “too big to fail” status, there would be more failures in the system every 5-8 years every time we have a 20%+ correction in stock market prices.
Without getting too into fractional reserve banking, their reserve rates are currently at zero (set by the Fed Reserve). Meaning, when you deposit a check to your bank, they can turn around and loan out 100% of the value of your deposit. And when you come back for your money, they make it hard with limits. If they charged money to store your funds, and then invested all that cash into the stock market. Any run on the bank of more than 1% of total deposits will collapse the entire banks liquidity. In other words, if you have more than 100k in your bank account, you better be emotionally and psychologically ready to part with it if the bank becomes insolvent or the stock market crashes.
Not surprising. I always thought it'd be an easy sell for banks to charge someone money to secure their money. "It's safer than keeping it in your mattress; why wouldn't we charge you money for that?"
The banks lend depositor's money out for interest. The small amount of interest you get on your savings or money market account is "your share" of the profit they made lending your money to others.
If a bank wanted to charge me a fee, I wouldn't be willing to let them lend my money to others for a profit. I would just pay for a safety deposit box if I was worried about securing money and the bank was going to charge me to have a regular account.
Yes of course; in a world where you can make money from lending out money that's all perfectly reasonable. In a world where you can't, then the sales pitch must change. Or banks switch to more complex/risky financial instruments that may not be insured against loss.
Safety deposit boxes usually aren't insured (or if they are aren't insured for very much or against very much), so if it came to that I would recommend researching that before doing such a thing as storing your money in one.
There used to be banks that only charged a fee and did not invest the money. But those banks have either merged with bigger banks that care about their shareholders more, or have gone out of business to banks that are fractional reserve banking in nature.
The problem is, bank solvency is extremely volatile with fractional banking, and if it wasn’t for FDIC “guarantees” and “too big to fail” status, there would be more failures in the system every 5-8 years every time we have a 20%+ correction in stock market prices.
Without getting too into fractional reserve banking, their reserve rates are currently at zero (set by the Fed Reserve). Meaning, when you deposit a check to your bank, they can turn around and loan out 100% of the value of your deposit. And when you come back for your money, they make it hard with limits. If they charged money to store your funds, and then invested all that cash into the stock market. Any run on the bank of more than 1% of total deposits will collapse the entire banks liquidity. In other words, if you have more than 100k in your bank account, you better be emotionally and psychologically ready to part with it if the bank becomes insolvent or the stock market crashes.