When Is a Safe Deposit Box Worth the Expense?

When I told Dad I wanted to do a blog post on his attempt to hoard Liberty gold coins in his teens, I asked if I could take photos of the coins to accompany the story.

“Sure, no problem,” he said. “I just need to find them. I think they’re at the bank.”

So he dispatched Mom to drive to their local Bank of America and check their safe deposit box.

Reminiscent of Geraldo Rivera’s dramatic 1986 televised opening of Al Capone’s Chicago vault, the opening of the safe deposit box was a major disappointment. There were no gold coins. There were no diamonds or pearls. There wasn’t even an old family watch.

Here’s what she found:

• Marriage license
• Social security cards
• Birth certificates
• Old out-of-date wills
• Titles for cars that had been sold or junked years before
• Handwritten Christmas gifts of property that never actually happened

I asked the next obvious question: How much do you pay for that box?

Mom: “We haven’t paid anything for it for years!” For fear of alerting them to their billing error, she swore me to secrecy, but I think it’s actually a perk of being a good customer (they have a few accounts at BoA).

According to ValuePenguin, local banks have a lot of leeway to set their own box rental rates (or to comp them for their best customers), but here are average costs of the largest banks:

• 3″ X 5″ X 24″ – $60 annually
• 5″ X 5″ X 24″ – $87 annually
• 3″ X 5″ X 24″ – $173 annually

It’s not much money but it’s recurring, so it slowly adds up.

For me, here are the 4 things possibly worth securing in a bank:

1. Small Valuable Items. This includes large-denomination cash (stashed for the final days?), gold bars, jewelry, etc.
2. Nostalgia Items. These also might be valuable, but not necessarily. I remember my dad being disappointed after his mom died and he went to the bank to claim her safe deposit box. The value of everything in there was matched by every annual payment, I recall him lamenting. But the items – engraved silver and crystal – had sentimental value, and are still cherished by the family (albeit on a shelf now).
3. Hard-to-Replace Items. These might be sentimental and/or valuable, but not necessarily. And I don’t mean large-denomination cash, although that is hard to replace. No, I’m talking about things like a birth certificate or passport or marriage license. Most of these are replaceable (depending on your age and native country) but it can be a pain in the butt.
4. Sensitive Items. These are anything you don’t want your dodgy cousin to get his hands on. You know, the one who is too lazy to get a retail or restaurant job, but will work overtime to scam someone out of their hard-earned cash. We’re talking about documents with your social security number, mother’s maiden name, birth date, and home address.

Biblical Perspective

The bible cautions against obsessing about accumulating and protecting material things, in Matthew 6:19-20:

Do not lay up for yourselves treasures on earth, where moth and rust destroy and where thieves break in and steal, but lay up for yourselves treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal.

Good advice, but you won’t get very far in the U.S. labor market without a social security card (a Sensitive Item) and you won’t get very far in the world without a passport (a Hard-to-Replace Item), so you need to stash important stuff somewhere.

Downsides of a Safe Deposit Box

Besides the expense, there are a few other downsides to using a bank safety deposit box:

• Convenience. You have to drive there and you can only access it when the bank is open.
• Security. Bank boxes are mostly safe, but they might be targeted for theft. When Willie Sutton was asked why he robbed banks, he replied “Because that’s where the money is.”
• Insurance. Some people think their box contents are covered by FDIC insurance, but they are wrong – the federal insurance only covers deposits up to $250,000 per owner per bank.

Downsides of Home Storage

The alternative, of course, is to keep things at home. Here are the risks of that approach:

• Fire. Your bank has fire sprinklers and fire-proof vaults. You probably don’t, although a fire-resistant safe is a good inexpensive alternative. But be sure to check the fire rating of it – I imagine there is nothing worse than combing through the ashes of your house to discover nothing but ashes where you thought your ‘fire-proof’ safe was.
• Theft. Your house is much more likely to be burglarized than a bank. Actually I should say: More likely than the safe deposit box section of a bank. What self-respecting bank robber has time to comb through Granny’s costume jewelry? And don’t discount the possibility of an ‘inside’ job – the family member who is desperate or devious enough to the take the risk of getting caught rifling through your valuables.
• Climate. If you have items that are sensitive to temperature and humidity, they will fair better in a bank.

My take? If your bank comps a box for being a good customer, go for it. Otherwise, you are probably better off with a high-end fire-rated safe at home. One that is anchored to the floor or wall, or hidden, so it can’t be readily carried off by a house invader.

You’ll take a hit on the upfront cost of a home solution, but you’ll reach break-even within a few years, at minimal additional risk if you do it right.

What do you do with your valuable or irreplaceable stuff?