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.
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.