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Bank Accounts

Is My Money Safe?
Types of Bank Accounts
What Type of Bank Account is Right for You?
Bank Account Features to Compare
ATM & Debit Cards
How to Pay Less in Bank Fees
Tips for Dealing with a Bank
If You Decide to Switch Banks
Deposit Boxes
If You Have a Complaint about a Bank

You have many choices concerning how you manage your money. We want to help you understand your choices if you decide to put money in an account at a depository institution such as a bank, savings and loan association, savings bank, or credit union.

There are many reasons for opening a bank account. Having your money in an account is safer than holding cash. A bank account may be a less expensive way to manage your finances than alternatives such as buying money orders to pay your bills or paying a business to cash your paycheck. A bank account may help you save money, since it is often easier not to touch your savings if you keep them in a bank or other institution. Finally, having a bank account may make it easier to keep track of your money and how you spend it.

Choosing a bank account to open is like choosing other products. Many different products are available — some plain, some fancy, some less and some more expensive than others. Because costs and features of bank accounts vary greatly, it is important to shop around to make sure the account you choose is the best one for you.

The information in this section will provide you with more details, and help you make informed decisions

I .Is My Money Safe?

Make sure your funds are fully protected by depositing them in a federally insured institution. While most banks and savings institutions are federally insured, a few are not (including some far-away institutions that offer high-rate accounts in the newspaper or over the Internet).

The Federal Deposit Insurance Corporation (FDIC) protects bank and savings association depositors up to $100,000 at each institution. FDIC-insured institutions must display an official sign at each teller window or teller station. You can also verify whether an institution is FDIC-insured by searching insured banks on the FDIC’s website or calling the FDIC’s Division of Compliance and Consumer Affairs (DCA) toll-free at 800-934-3342.

Depending on how your bank accounts are structured, you can even have hundreds of thousands of dollars in one bank and still be fully protected. You do not need to worry if you or your family has less than $100,000 in all your accounts at the same bank. But if your combined accounts total $100,000 or more, make sure they are within the insurance limit. If you have questions, speak with a DCA deposit insurance specialist (call 800-934-3342). Remember, too, that FDIC insurance covers only deposits. Mutual funds or annuities you buy at your bank are investments, not deposits. That is why the FDIC does not insure them against loss.

Questions about federal deposit insurance at credit unions should be directed to the National Credit Union Administration (telephone 703-518-6300; address: 1775 Duke Street, Alexandria, Virginia 22314-3428).

II. Types of Bank Accounts

Checking Accounts
Money Market Accounts
Savings Accounts
Time Deposits (Certificates of Deposit)
Basic or No Frill Banking Accounts
Credit Union Accounts

Depository institutions may offer a great variety of accounts, but they generally fall within one of these five types:

Checking Accounts

With a checking account you use checks to withdraw your money from the account. You may use checks to pay your bills, purchase products and services (at businesses that accept personal checks), send money to friends and family, and many other common uses. You can also use checks to transfer money into accounts at other financial institutions. You have quick, convenient, and, if needed, frequent-access to your money. Typically, you can make deposits into the checking account as often as you choose. Many institutions will enable you to withdraw or deposit funds at an automated teller machine (ATM) or to pay for purchases at stores with your ATM card.

Some checking accounts pay interest; others do not. A regular checking account - frequently called a demand deposit account - does not pay interest, whereas a negotiable order of withdrawal (NOW) account does.

Institutions may impose fees on checking accounts, besides a charge for the checks you order. Fees vary among institutions. Some institutions charge a maintenance or flat monthly fee regardless of the balance in your account. Other institutions charge a monthly fee if the minimum balance in your account drops below a certain amount any day during the month or if the average balance for the month drops below the specified amount. Some charge a fee for every transaction, such as for each check you write or for each withdrawal you make at an ATM. Many institutions impose a combination of these fees.

Although a checking account that pays interest may appear more attractive than one that does not, it is important to look at fees for both types of checking accounts. Often checking accounts that pay interest charge higher fees than do regular checking accounts, so you could end up paying more in fees than you earn in interest.
Money Market Accounts

Most institutions offer an interest-bearing account that allows you to write checks, called a money market account. This type of account usually pays a higher rate of interest than a checking or savings account does. Money market accounts often require a higher minimum balance to start earning interest, but they frequently pay higher rates for higher balances. Withdrawing funds from a money market account may not be as convenient as doing so from a checking account. Each month, you are limited to six transfers to another account or to other people, and only three of these transfers can be by check. As they do with checking accounts, most institutions impose fees on money market accounts.
Savings Accounts

With savings accounts you can make withdrawals, but you do not have the flexibility of using checks to do so. As with a money market account, the number of withdrawals or transfers you can make on the account each month is limited.

Many institutions offer more than one type of savings account — for example, passbook savings and statement savings. With a passbook savings account you receive a record book in which your deposits and withdrawals are entered to keep track of transactions on your account; this record book must be presented when you make deposits and withdrawals. With a statement savings account, the institution regularly mails you a statement that shows your withdrawals and deposits for the account.

As with other accounts, institutions may assess various fees on savings accounts, such as minimum balance fees.
Time Deposits (Certificates of Deposit)

Time deposits are often called certificates of deposits, or CDs. They usually offer a guaranteed rate of interest for a specified term, such as one year. Institutions offer certificates of deposit that allow you to choose the length of time, or term, that your money is on deposit. Terms can range from several days to several years. Once you have chosen the term you want, the institution will generally require that you keep your money in the account until the term ends, that is, until “maturity”. Some institutions will allow you to withdraw the interest you earn even though you may not be permitted to take out any of your initial deposit (the principal).

Because you agree to leave your funds for a specified period, the institution may pay you a higher rate of interest than it would for a savings or other account. Typically, the longer the term, the higher the annual percentage yield.

Sometimes an institution allows you to withdraw your principal funds before maturity, but a penalty is frequently charged. Penalties vary among institutions, and they can be hefty. The penalty could be greater than the amount of interest earned, so you could lose some of your principal deposit.

Institutions will notify you before the maturity date for most certificates of deposit. Often certificates of deposit renew automatically. Therefore, if you do not notify the institution at maturity that you wish to take out your money, the certificate of deposit will roll over, or continue, for another term.
Basic or No Frill Banking Accounts

Many institutions offer accounts that provide you with a limited set of services for a low price (often referred to as “basic” or “no frill” accounts). Basic accounts give you a convenient way to pay bills and cash checks for less than you might pay without an account. They are usually checking accounts, but they may limit the number of checks you can write and the number of deposits and withdrawals you can make. Interest generally is not paid on basic accounts. Compare basic and regular checking accounts for the best deal in low fees or low minimum balance requirements.
Credit Union Accounts

Credit unions offer accounts that are similar to accounts at other depository institutions, but have different names. Credit union members have “share draft” accounts (rather than checking), “share” accounts (rather than savings), and “share certificate” accounts (rather than certificate of deposit).

III. What Type of Bank Account is Right for You?

What type of bank account should you open? The answer depends on how you plan to use the account. If you want to build up your savings and you think that you will not need your money soon, a certificate of deposit may be right for you.

If you need to reach your money, however, a savings or checking account may be a better choice. You will probably find that a checking account is best for you if you plan to write several checks each month (for example, to pay bills). But if you usually write only two or three checks each month, then a money market account might be a better deal. Money market accounts usually pay a higher rate of interest than do checking accounts, but minimum balance requirements are often higher as well.

IV. Bank Account Features to Compare

Information That Banks Must Disclose
Rates
Fees
Other Features

Information That Banks Must Disclose
The law requires depository institutions to provide you with -or disclose to you - the important terms of their consumer deposit accounts. Banks must tell you:
- The annual percentage yield and interest rate;
- Cost information, such as fees that may be charged; and
- Information about other features such as any minimum balance amount required to earn interest or to avoid fees.
You will usually be provided with disclosures before you actually open a bank account. However, if you ask for it, a bank must give you information about any consumer deposit account it offers. In addition, the law generally requires that interest and fee information be provided on any periodic statements sent to you.

In shopping for a bank account, it is important to look closely and compare features. Here are some of the most common features to compare:
Rates
Interest Rate - The rate of interest (interest is money a bank pays you for its use of your funds), expressed as a percentage, that an account will earn if funds are kept on deposit for a full year. It does not reflect the effect of compounding interest.
- What is the interest rate?
- Can the bank change the rate after you open the bank account?
- Does the bank pay different levels of interest depending on the amount of your bank account balance, and, if so, in what way is interest calculated?
Interest Compounding - The frequency that earned interest is added to the principal so that you begin to earn interest on that amount as well as on the principal. Often referred to as interest on interest. The more often interest is compounded, the greater the annual percentage yield.
- How often is interest compounded? In other words, when does the institution start paying interest on the interest you have already earned in the bank account?
Annual Percentage Yield (APY) - The APY is a rate that reflects the amount of interest you will earn on a deposit on a yearly basis expressed as a percentage.
- What is the minimum balance required before you begin earning interest?
When You Start Earning Interest - Interest is money a bank pays you for its use of your funds.
- Do you begin earning interest on the day you deposit a check into your bank account - called earning on your ledger balance?; or
- Do you begin earning interest later, when the bank receives credit for the check - known as earning on your collected balance?
Fees
- Will you pay a flat monthly fee?
- Will you pay a fee if the balance in your bank account drops below a specified amount?
- Is there a charge for each deposit and withdrawal you make?
- If you can use ATMs to make deposits and withdrawals on your bank account, is there a charge for this service? Does it matter whether the transaction takes place at an ATM owned by the bank?
- If you have a checking account or a money market account, how much will ordering checks cost?
- Will you be charged for each check you write?
- Are fees reduced if you have other accounts at the bank?
- Are fees reduced or waived if you agree to directly deposit your paycheck or government payments, like a social security check?
- What is the fee if you request the bank to stop payment on a check you have written?
- Is there a charge for asking how much money you have in your bank account (a balance inquiry)?
- Does the bank charge a fee for closing a bank account soon after it is opened? If it does, when will the fee be imposed?
- What is the charge for writing a check that bounces (a check returned for insufficient funds)? And what happens if you deposit a check written by another person, and it bounces? Are you charged a fee?
Other Features
- Does the bank limit the number or the dollar amount of withdrawals or deposits you make?
- If you close the bank account before interest is credited to your account, will the bank pay you the interest that has been earned until that time?
- How soon does the bank allow you to withdraw funds that you have deposited to your bank account?

VI. ATM & Debit Cards

For many bank accounts, banks can issue you debit cards, in the form of basic Automated Teller Machine (ATM) cards, that let you obtain 24 hour access to money in your bank account through ATM cash machines, or more sophisticated debit cards that let you use ATM machines plus use your debit card for purchases.

When you use a debit card, funds come directly out of your bank account (just like writing a check). And because ATM withdrawals and purchases are listed on your monthly statement you can track your spending.

Certain debit cards may have the logo of a familiar credit card company on them. Do not be confused. These cards are designed to provide you the convenience of making purchases wherever such credit cards are accepted (millions of businesses worldwide), but the purchase amounts are subtracted directly from your bank account and listed on your monthly statement. Debit cards do not extend you credit or generate separate bills. They also do not help you build a credit record, which may be important if you intend to purchase a car or home. (For more information on credit cards, see Credit Cards.)

Your bank will provide you with a personal identification number (PIN) to use with your card, which is essentially a password for electronic access to your account. With your debit card and PIN, you can withdraw cash, make deposits, or transfer funds between bank accounts, and pay for retail purchases with certain cards.

When you withdraw cash, some ATMs charge a fee if you are not a member of their network or are making a transaction at a remote location. ATMs must disclose the fee on the terminal screen or on a sign next to the screen.

Report a lost or stolen ATM or debit card to the issuer immediately. If you report an ATM card missing before it is used without your permission, you are not responsible for any unauthorized withdrawals. Federal regulations limit your liability to $50 if you report the loss within two business days after you realize your card is missing, and to $500 if you report the loss between 2 and 60 days. Under Federal law you could lose all the money in your bank account and the unused portion of your line of credit established for overdrafts if you fail to report an unauthorized transfer or withdrawal within 60 days after your bank statement is mailed to you. However, self-imposed industry rules limit your liability to zero if you report the loss within two business days, and to $50 if you report it more than two business days after realizing your card is missing.

Purchases made with a debit card are handled in one of two ways: either you enter your personal identification number, as you would at an ATM, or you sign for the purchase, similar to a credit card transaction. Ask for a debit card that must be used with a PIN to make it harder for thieves to use your lost or stolen cards or account numbers.

Keep your PIN a secret. Do not write your PIN on the card or on a slip of paper kept with your card. Take your ATM receipt after completing a transaction. Reconcile all ATM receipts with bank statements as soon as possible.

When you use a debit card for purchases, these purchases will be shown on your periodic statement from your bank account. If there is an error on your account, contact your bank or the issuer of the card at the address or phone number the company provided. When you use an electronic funds transfer, federal law does not give you the right to stop payment. It is up to you to resolve the problem with the seller.

Stored-value cards, issued by some financial institutions and merchants, contain cash value stored electronically on the card itself. Stored-value cards and the transactions you make using them may not be covered by the Electronic Funds Transfer Act, which means you may not be covered for loss or misuse of the stored-value card.

VII. How to Pay Less in Bank Fees

Here are some suggestions to reduce the bank fees you pay:

Banks want to encourage customers to do most of their banking with them, so if you have more than one account at the bank, you may qualify for no-fee or low-fee offers. If you have money in both checking and savings accounts, ask whether the balances could be combined for purposes of meeting the bank’s minimum balance requirements.
If you do not care about receiving your canceled checks back each month, you might qualify for a special deal on your checking account.
Ask your banker about ways to reduce or eliminate charges that you pay. For example, if you write very few checks each month, consider a “basic” banking account (see Types of Accounts). Remember always to read the fine print and think through the costs of switching any accounts.
Your bank might give you a special deal on your checking account if you arrange for “direct deposit” of your paycheck (having your employer deposit your pay directly in your bank). Having funds automatically deposited into your account also can help avoid bounced checks.
Look into special deals if you keep a certain amount in your bank account, arrange for “direct deposit”, or do a lot of your banking electronically (ATMs, banking at home by computer).
Some banks offer “clubs” with special offers or savings for certain groups, such as senior citizens. Check these out.
Limit or avoid “surcharges” (access fees) at the automated teller machine by using your own bank’s ATMs or those owned by institutions that do not charge fees to non-customers. If you do pay a fee, consider withdrawing larger sums each time so you will cut down on the number of transactions.
If you are a good customer with a clean record, your bank might be willing to refund an occasional service charge for a late credit card or loan payment, a bounced check or some similar offense. You might also be able to get a lower interest rate on a credit card or other loan.
Avoid bounced checks by balancing your checkbook.
With “overdraft” protection, the bank will automatically honor a check you write even if you do not have enough funds in the bank account.
Instead of ordering checks through the bank, consider buying them from less expensive sources, such as mail-order companies. If you write a lot of checks each month, the cost-savings could be significant.
Every few years, compare your bank’s costs to those of a few competitive banks. You may find a great bargain elsewhere or discover a better deal at your current bank. When comparison-shopping, concentrate on the bank accounts and services you actually use. Be aware that a low interest rate offered on a credit card or another loan may just be an introductory rate that could go up substantially after a few months.

VIII. Tips for Dealing with a Bank

You are not married to your bank, but you can enjoy a nicer long-term relationship if you try these tips for obtaining attractive interest rates, low fees and solid service. There is always something you can do differently or better to make you feel more comfortable and more “at home”…and perhaps save some time and money, too.

Ask yourself, and your bank, if you’re getting the best deal - About once a year, talk to a customer services representative at your bank to make sure you’re signed up for the right programs to meet your needs. Maybe a simple adjustment to your banking practices - such as having your paycheck automatically deposited into your checking account - can get you a higher interest rate or reduce or eliminate certain service charges. Perhaps a change in your banking habits will help cut your fees. Maybe your good track record at the bank will qualify you for a lower interest rate on a loan or credit card. Or maybe there is just a new or better bank account that you did not know about. I asked at my bank how I could get a better deal on my checking account because I was paying a minimum balance fee and receiving no interest. I was told that because I had additional funds in a money market account I was now eligible for an interest-earning, no-minimum balance checking account. That is a good deal, but I was not aware of it until I raised the question.
Every three or four years (if not more often), comparison-shop to see if you could do significantly better at another bank. Start by listing the products and services you really use—most likely checking, ATMs and one or two others. Make a note of the interest rate, minimum balance requirements and so on. Then go to your statements for the last year or so and calculate the fees and penalties you typically pay—for monthly account maintenance, ATMs, bounced checks, etc. Now compare your bank with three or four others. You might discover that you can earn or save hundreds of dollars by using another bank. Or, better yet, you may find that your own bank still offers a good value or that it is willing to make concessions to keep you as a customer. Then there is little reason to go through the trouble of switching banks. (If you decide to leave your bank, see If You Decide to Switch Banks.)
If deposit insurance is important to you, make sure your funds are fully protected - Be sure that your deposits are in a federally insured institution. For more details, see Is My Money Safe?
Simplify your life. Your bank can arrange for the “direct deposit” of your pay and benefit checks and other regular income. Most experts agree that direct deposit is safer and more convenient than paper checks. There are no delays in getting funds deposited because checks are not lost in the mail, forgotten at home or waiting for you to return from vacation. As mentioned previously, you might even get a break on your checking account if your paycheck is deposited electronically.
You also can have your bank automatically make some of your regular payments, such as your mortgage, health insurance premiums, utility bills and investments in a mutual fund. That can be an easy, economical alternative to writing and mailing a lot of checks each month. Also think about doing other banking the high-tech way, such as withdrawing money from ATMs instead of standing in line at the branch or rushing to get to the branch during banking hours. Consider using a “debit card” or “check card” to pay for purchases from your checking account without writing a check. Banking from home, by phone or computer, also can be a time-saver.
Get to know bank employees you can turn to for help. Write down the names and numbers of employees who, in-person or over the phone, seem to be especially helpful and knowledgeable. If possible, become a familiar voice or face to them. Why go to this trouble? A good teller, branch manager, customer service representative, loan officer or supervisor can help get your questions answered and your problems solved. They may even come to your aid in a financial emergency, especially if they know you and that you have a good relationship with the bank.
Do not be afraid to complain. No bank employee really enjoys hearing from a disgruntled customer. But your bank’s managers probably would prefer you bring a problem to their attention and be given the chance to fix it rather than take your business elsewhere or tell all your friends about “that lousy bank.” If you do not get satisfaction from a customer service representative or another employee, consider talking to a supervisor…or even one of your banker buddies mentioned in the previous item. And if you are still having problems, consider contacting the institution’s federal regulator. (For more tips on how to resolve a dispute with your bank, see If You Have a Complaint about a Bank.)
Do not be afraid to ask for a break. Bounce a check for the first time ever? Want a copy of an old monthly statement? Think the fees for your mortgage application are a bit high? Depending on the circumstances, your bank might be willing to reduce or waive a fee or penalty, especially if you have been a good customer and do not have a history as a “repeat offender.” Also consider talking to your banker if you are having problems repaying your bank loan. Explain the situation and any unusual circumstances. Many lenders will agree to temporary or permanent reductions in your loan interest rate, monthly payment or other charges. Again, it helps if you have had a clean record in the past.
Read your monthly statements. Your bank statements, credit card bills and other mailings from your bank may not make for exciting reading, but they can be among the most important literature you will read. Tucked inside any envelope from your bank could be your only notice about new fees or penalties for certain accounts. If you are not aware of these changes, and you do not notice the higher fees on your next monthly statements, you could end up paying more for your banking and not even realize it.
Also review your bank statement as soon as possible after it arrives to make sure there are no unauthorized charges. If you suspect that a thief has used one of your checks or your credit card, go right to the phone and call the bank (see Unauthorized Use of Your Account (What to Do if Your Identity is Stolen). Under most state laws, you are required to exercise “reasonable promptness” in examining any bank statement that shows payments from your account.

How quickly you report a problem with an ATM debit card could be especially important in limiting your losses. Your maximum loss is just $50 if you report your ATM debit card lost or stolen within two business days of discovering the problem. But if you wait between two and 60 days, you can be liable for up to $500 of what a thief withdraws. Wait more than 60 days after receiving a bank statement with an unauthorized ATM transfer and you may be responsible for all the money withdrawn. (You are not responsible for funds withdrawn after you notify the bank that the ATM card is lost or stolen.)

Another good reason to look at your bank statement as soon as possible is to make sure you have enough in your checking account to avoid bounced checks.
Read the fine print. Knowing the costs and requirements of an account before you sign on the dotted line can prevent a complaint or hassle later. Example: Just because a bank account is advertised as “free” or “no cost” does not mean you will never run up a cost. An institution is not allowed to advertise a “free” checking account if you could be charged a maintenance or activity fee (such as for going below a required minimum balance). But your bank can offer a free account and still impose charges for certain services, such as check printing, automated teller machines and bounced checks. Also, ask if an attractive interest rate on a credit card or a deposit is really just a short-term, introductory “teaser” rate.
Keep good records. Hold on to your receipts for deposits, ATM withdrawals, credit card charges and other transactions long enough to confirm that your monthly account statements are correct. (Later it’s OK to toss these pieces of paper in the trash, but be sure to rip them up enough so that a thief cannot read or use them.) Also, keep copies of any contracts or other documents you sign with the bank (loans, certificates of deposit, etc.), along with any accompanying materials. If there is ever a dispute or a discrepancy, you will have those documents to refer back to.
Use your bank as an information resource. A good banker can be an excellent source of advice and information-perhaps about starting or expanding a business, buying a car or home, qualifying for a loan or dealing with a debt problem. He or she also might be able to direct you to good contacts in other businesses or have excellent reference material handy. All of this is yet another reason to get to know the right people at the bank.
Your bank also could have a customer newsletter or a website that provides useful tips for handling your financial affairs. Many banks also offer seminars on topics such as saving for retirement or a child’s college education. Add this information to everything else you learn from your lawyer, accountant, financial planner, the media and other sources, and then put it to use when shopping for, or using, financial services. And anything you can learn from the bank about your rights and responsibilities as a consumer can help you avoid misunderstandings and get any problems solved quickly.

Final Thoughts. It is a good idea periodically to shop for and compare financial services, just as you would any consumer goods. If nothing else, you will want to know that the rates, fees and services at your existing bank are at least comparable to what is out there in the marketplace. You will receive more satisfaction from your bank when you know the people there and the services they can provide. Every relationship has its ups and downs, but with a little effort, you might just feel more at home with your bank.

IX. If You Decide to Switch Banks

Perhaps you are moving, getting married, or just unhappy with your current bank. Your switch to a new bank can be smoother if you do the following:

Balance your checkbook and make sure all outstanding checks have cleared before you close your checking account. This will ensure that you and the bank agree on how much money is due to you. Also, you will not get hit with fees for checks that bounce after you close the account.
Open an account at your new bank before you leave your old bank. That way you can write checks, make ATM debit card withdrawals or otherwise bank without interruption
If you have arranged for direct deposit of your pay or benefits, do not close the old bank account until you are sure the next scheduled payment will be going into the new bank account.
If you arranged with your old bank to regularly transfer money from your bank account, such as to automatically pay your life insurance premiums or your mortgage, make arrangements for future payments through your new bank.
If you are changing addresses, make sure your old bank has your new address and phone number. Do this in writing. Do not trust a phone call. Your bank may need to contact you weeks or months after you close your bank account.
Be sure your financial records at home are clear about the fact that your bank account was closed. Otherwise, you or your heirs some day might believe there is money “forgotten” in an old bank account and waste time trying to recover it.
Do you have anything in the bank’s safe deposit box? Remember to clean it out and return the keys.
Keep a copy of the list of helpful bank employees we suggested you compile. They still can help with a question or problem about your relationship with the bank, such as if you need assistance gathering old bank records.

X. Safe Deposit Boxes

In or Out?
Access by Others
How Safe?

If you think there is not much to using a safe deposit box beyond putting keys in locks, you are in for a surprise. The safe deposit box service may be tucked down in the basement or far corner of your bank, but in its own quiet way it is among the bank’s most important offerings– and among the most misunderstood.

While millions of Americans rent a safe deposit box, few pay attention to questions such as who could or should have access to a safe deposit box (especially in an emergency) and how the contents of the safe deposit box are protected. About the only time people ever consider these issues is when there is a problem, and then it may be too late to prevent a loss.

To help you decide whether to use a safe deposit box, and how to use one wisely, read the following questions and answers. To keep things simple, our references to “banks” are intended to apply broadly to banks, savings institutions and credit unions.

In or Out?

Why should I rent a safe deposit box?
It is a convenient place to store important items that would be difficult or impossible to replace. The safe deposit box also offers privacy (only you know what is inside) and security. Although many people like to keep valuables close by in a closet, safe or file cabinet at home or in the office, these places probably are not as resistant to fire, water or theft. Also, some insurance companies charge lower insurance premiums on valuables kept in a bank’s safe deposit box instead of at home.
What items should go into a safe deposit box?
Any personal items that would cause you to say, “If I lose this, I am in deep trouble.” Important papers to consider putting into your safe deposit box: originals of your insurance policies; family records such as birth, marriage and death certificates; original deeds, titles, mortgages, leases and other contracts; stocks, bonds and certificates of deposit (CDs). Other valuables worthy of a spot in your safe deposit box include special jewels, medals, rare stamps and other collectibles, negatives for irreplaceable photos, and videos or pictures of your home’s contents for insurance purposes (in case of theft or damage).
OK, what should NOT go in a safe deposit box?
Anything you might need in an emergency, in case your bank is closed for the night, the weekend or a holiday. Possible examples: originals of a “power of attorney” (your written authorization for another person to transact business on your behalf), passports (in case of an emergency trip), medical-care directives if you become ill and incapacitated, and funeral or burial instructions you make. Consider giving the originals to your attorney, and making copies to go in your safe deposit box or to give a close friend or relative.
If I have a will, should it go in my safe deposit box?
Whether your will should be at the bank or elsewhere, such as with your attorney, depends on what your State law says about who has access to your safe deposit box when you die. Ideally, the person you name to oversee your financial matters after you die (your “executor” or “personal representative”) should have early access to your original will (copies are not valid). Some States make it relatively easy for co-renters, family members or the executor to remove the will and certain other documents (such as life insurance policies and burial instructions) from a deceased person’s safe deposit box. In those States, it may be a good idea to leave your will in the safe deposit box. But other States may require a court order or another official action to remove the will, which can take time and money. That is why you should check with a bank official (or your lawyer) to find out what is required under State law and your bank’s own policies in the event of your death.

Access by Others

Can I arrange for someone to access my safe deposit box in an emergency?
Yes. You can jointly rent your safe deposit box with a spouse, child or other person who would have unrestricted access to the box. (Warning: In some states your co-renter may face delays in accessing the box if you die. Also, merely giving someone else a key will not be enough to grant access. He or she also must sign the bank’s rental contract as a joint-renter.) An alternative is to appoint a “deputy” or “agent” (NOT a power of attorney) who will have access to your safe deposit box. A deputy/agent and a general power of attorney are similar in that you may grant or revoke the authority at any time, and the appointment ends if you become incompetent or die. The main difference is that a deputy or agent is appointed in the presence of the box renters and a bank employee, which gives the bank greater assurance about the validity of the authorization. Many people are surprised to find that a power of attorney does not allow access to a safe deposit box. The bank has no way of knowing if the power of attorney is still in effect or if the renter was competent when the power of attorney was signed.
Can law enforcement authorities access my safe deposit box without my knowledge or permission?
If a local, state or federal law enforcement agency persuades the appropriate court that there is “reasonable cause” to suspect you’re hiding something illegal in your safe deposit box (guns, drugs, explosives, stolen cash or money obtained illegally), it can obtain a court order, force the box open and seize the contents. What about non-criminal matters, such as a dispute with the Internal Revenue Service (IRS), a company, or other people over money they say you owe? The IRS can “freeze” your assets (effectively placing a hold on your bank accounts and safe deposit box) until the dispute is resolved. Private parties also can freeze your assets but doing so involves going before a judge and proving that there is a legitimate dispute over a debt.
Can a safe deposit box be declared “abandoned” and the contents turned over to the government?
Yes, but only if you do not pay your rental fee for a number of years (as determined by State law) and after attempts to notify and locate you prove unsuccessful. In that case, your safe deposit box will be reported as abandoned and the contents will be turned over to the State’s unclaimed property office. Often this happens because the renter dies and the heirs have no knowledge of the box or its contents. The good news is that even if the State has sold your unclaimed property, you or your heirs still have the right to claim its value. To contact a State’s unclaimed property office (sometimes part of the treasurer’s office), check the State government section in your phone book. You may also contact the National Association of Unclaimed Property Administrators.
What happens to my safe deposit box if my bank fails?
When an insured bank or thrift closes, the Federal Deposit Insurance Corporation (FDIC) usually arranges for another institution to take it over, including branches where you might have a safe deposit box. In those situations, you should be able to conduct business as usual. If the FDIC cannot find a buyer for your bank, it arranges for you to remove the contents of your safe deposit box so you can obtain a box at another institution, if you wish. This is done within a few days after the bank fails.

How Safe?

Are safe deposit boxes protected from fire, flood or other disasters?
The companies that manufacture safe deposit boxes and the vaults that house the boxes make them highly “resistant” to fire, flood, heat, earthquakes, hurricanes, explosions or other disastrous conditions. However, the key word here is “resistant.” There is no 100 percent guarantee against damage, and substantial losses sometimes occur.
Are there extra precautions I can take to minimize damage?
Yes. Prevent water damage by sealing items in airtight, zip-lock bags or Tupperware-style containers. Also, put your name on each item, keep a list of the box’s contents, make copies of important documents and even take photos of your most prized items left in the safe deposit box. That way, if a disaster occurs, your chances of successfully identifying, claiming or recovering an item would be increased.
Does FDIC insurance cover the contents of safe deposit boxes if they are damaged or stolen?
No. By law, the FDIC only insures deposits in deposit accounts at insured institutions. Although you may be putting valuables, including cash and checks, into an area of the bank that has the word deposit in its name, these are not deposits under the insurance laws that the bank can use, for example, to make loans to other customers. A safe deposit box is strictly a storage space provided by the bank.
Does anyone insure my safe deposit box against damage or theft?
Unless your bank is found to be negligent in the way it handled or protected your safe deposit box, do not expect the bank or its private insurance to reimburse you for any damage or loss. If you are concerned about the safety or replacement of the items in your box, first check whether your own homeowner’s or tenant’s insurance policy covers your safe deposit box against damage or theft. Many do cover box contents up to a certain dollar amount, even including items lost or damaged when they are out of the box. If your home-related insurance is not sufficient, talk to your insurance agent about additional protection or find out if your bank is among those selling limited insurance coverage on safe deposit boxes. Before buying any extra coverage, carefully review the policy and do some comparison-shopping.
Can thieves rob a safe deposit box?
Yes, it happens, but fortunately not often. Safe deposit boxes are stored in concrete or steel vaults equipped with sophisticated alarms, locks, video cameras, motion sensors, heat detectors and other security devices. Most U.S. banks also have very strict access procedures, among them: verifying signatures, restricting access to the vault, never leaving anyone unattended inside the vault, and requiring two different keys (one being the bank’s “guard key”) to open a safe deposit box.

XI. If You Have a Complaint About a Bank

Federal Reserve
Other Federal Agencies

Federal Reserve

If you have a complaint about a bank or other financial institution, the Federal Reserve System might be able to help you. The Federal Reserve is responsible for carrying out many of the federal laws that protect consumers in their dealings with financial institutions. The Board of Governors, located in Washington, D.C., works with the twelve Federal Reserve Banks around the country to make certain that the commercial banks which the Federal Reserve supervises abide by these laws.

The Federal Reserve can help individual consumers by answering questions about banking practices, and investigating complaints about specific banks under its supervisory jurisdiction. Complaints about financial institutions that are not supervised by the Federal Reserve System are referred to the appropriate federal agency.

As a federal regulatory agency, the Federal Reserve System investigates consumer complaints received against State chartered banks that are members of the System. If you think a bank has been unfair or deceptive in its dealings with you, or has violated a law or regulation, as a consumer you have the right to file a complaint.

The Federal Reserve is particularly concerned that state member banks comply with federal laws and regulations that prohibit discrimination in lending. In such cases, additional steps are taken to ensure that your complaint is promptly and thoroughly investigated.

Before writing or calling, the Federal Reserve encourages consumers to try to settle the problem with the financial institution first. This may involve directly contacting senior bank management or the bank’s customer service representative for assistance. If you are still unable to resolve the problem, you may file a written complaint with the Federal Reserve including the following information:

Your name, address and daytime telephone number, including area code
Name and address of the bank involved in your complaint or inquiry
Your bank account or credit card number
The name of the person you contacted at the bank, along with the date, if applicable
Description of the complaint: state what happened, giving the dates involved and the names
of those you dealt with at the bank
Include copies of any letters or other documents that may help to investigate your complaint
Do not send original documents. Copies are preferred
Remember to sign and date your letter
It is important to give as much information about the problem as possible; this will assist in providing a quicker response to you.

Send your complaint to:

Board of Governors of the Federal Reserve System
Division of Consumer and Community Affairs
20th and C Streets, N.W., Stop 801
Washington, DC 20551

For further information you may call the Federal Reserve at: (202) 452-3693.

Consumer complaints filed against state member banks are investigated by the 12 regional Federal Reserve Banks. Once your complaint is received, it will be reviewed by the consumer affairs staff who will contact the bank about your concern. The Reserve Bank will investigate each issue raised in your letter and ask the bank involved for information and records in response to your complaint. If additional information is needed, the Federal Reserve will contact you by telephone or in writing. The Reserve Bank will analyze the bank’s response to your complaint to ensure that your concerns have been addressed and will send a letter to you about its findings. If the investigation reveals that a federal law or regulation has been violated, you will be informed of the violation and the corrective action the bank has been directed to take.

Although the Federal Reserve investigates all complaints involving the banks it regulates, it does not have the authority to resolve all types of problems. For example, it is unable to resolve contractual disputes, undocumented factual disputes between a customer and a bank, or disagreements about bank policies and procedures. These matters are usually determined by bank policy and are not addressed by federal law or regulation. In many instances, however, by filing a complaint a bank may voluntarily work with you to resolve your situation. If, however, the matter is not resolved, the Federal Reserve will advise you whether a violation of law has occurred or whether you should consider legal counsel to resolve your complaint.

Other Federal Agencies

Comptroller of the Currency
Office of the Ombudsman
Customer Assistance Unit
1301 McKinney Street
Suite 3710
Houston, TX 77010
1 (800) 613-6743
(regulates banks with national in the name or N.A. after the name)

Federal Deposit Insurance Corporation
Compliance and Consumer Affairs
550 17th Street, N.W.
Washington, DC 20429
(202) 942-3100 or 1 (800) 934-3342
(regulates state chartered banks that are not members of the Federal Reserve System)
For the telephone number and address of a regional office near you, click here.

Office of Thrift Supervision
Consumer Programs
1700 G Street, N.W.
Washington, DC 20552
(202) 906-6237 or 1 (800) 842-6929
(regulates federal savings and loans and federal savings banks)

National Credit Union Administration
Office of Public and Congressional Affairs
1775 Duke Street
Alexandria, VA 22314-3428
(703) 518-6330
(regulates federally chartered credit unions)

Federal Trade Commission
Consumer Response Center
6th and Pennsylvania, N.W.
Washington, DC 20580
877-FTC-HELP - toll free (877-382-4357)
(regulates finance companies, stores, auto dealers, mortgage companies, and credit bureaus)

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