Why We Can’t Find Safe Deposit Boxes

Bank safe deposit boxes have been around for decades. Maxx-Studio/Shutterstock

Bank safe deposit boxes have been around for decades. There was a time when important documents or old coin collections were kept in safety deposit boxes. These boxes were a staple of most banks. And if you had one, although you rarely visited it, you always guarded your key.

But for those looking to keep their valuables in a safety deposit box, they may get a surprise. Have you noticed that safety deposit boxes are slowly disappearing?

JP Morgan Chase, for example, is starting to phase out its safe deposit box service from its branches. It will no longer offer safe deposit boxes to new customers. For the moment, they will still accommodate existing clients.

Other banks have also pulled back on offering safe deposit boxes, including Capital One, HSBC, and Barclays.

There are several reasons this trend is happening, with the bottom line being that safe deposit boxes are becoming obsolete.

Demise of Bank Branches

The total number of bank branches peaked at 82,965 in 2012 and has been declining ever since, according to the Federal Deposit Insurance Corporation. In 2024, there are 64,181 bank branches. One modeling prediction shows the number of bank branches nationwide plummeting to 1,328 by 2040.

Price of Commercial Real Estate Causes Branch Losses

Another reason for the disappearance of safe deposit boxes is the price of real estate.

In 2024, commercial real estate for office space averages $37 per square foot nationally. New York comes in at $71 while San Francisco is $60.

According to David McGuinn, a safe deposit specialist, “It is the most expensive square footage you can put in a new branch.” For this reason, many banks are just eliminating safe deposit boxes.

Digital Storage Eliminates Safe Deposit Box Need

Many people have their important documents stored digitally. In fact, banks are beefing up their digital storage. JPMorgan Chase is plans to hire 2,000 engineers across the globe to help with storage and other digital needs.

And for physical documents like wills or health care directives, you can file them away digitally.

There are tools like Everplans or DocuBank that are used by estate attorneys and advisors to help with their clients’ electronic document storage. They help organize documents and give heirs quick access to the information electronically.

Online Banking Changed People’s Behavior

Online banking has changed the way people conduct transactions. Whether it’s a traditional bank’s online services or a digital bank, people aren’t going into branches.

In 2023, 66 percent of the population used online banking. This number is expected to increase to 79 percent by 2029.

Thirty percent of consumers have a bank account with a digital-only bank. This means their transactions are completed exclusively online. These people are not going into a brick-and-mortar branch.

Digital-only banking is the most popular with 25- to 34-year-olds.

Bank’s Cost for Maintaining Safe Deposit Boxes

Offering safe deposit boxes is an expensive service. First, the vault must be built to house them, and then keys must be made and maintained. And finally, staff must be trained to secure the boxes properly.

The keys must be kept in a guarded space. Trained employees must verify that it’s the true owner and accompany the customer into the vault. They also must escort them to the viewing room. And viewing rooms must be inspected when the customer comes out.

All of this takes time and resources.

And, unfortunately, for the banks, safe deposit boxes aren’t revenue generators. Although the cost depends on your bank, size of box, and region, most safe deposit boxes run between $15 and $150 per year.

Bank’s Liability Concerns

Many customers are unaware that banks don’t insure the contents of safe deposit boxes. There isn’t any coverage for perils like:

• burglary
• fire
• flood
• hurricane
• tornado
• mysterious disappearance

The contents are also not insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration. The customer is on their own.

However, banks have had to defend themselves from suits of customers who claimed to have lost items or had items damaged from their safe deposit boxes.

Will Safe Deposit Boxes Be Eliminated?

Despite some major banks phasing out safe deposit boxes, there are still many that are left for customers. Currently, there are 25 million safe deposit boxes in the United States.

Safe deposit boxes are still a valid and safe way to protect valuables and important papers. They also give brick-and-mortar banks the opportunity to cross-sell customers. It allows them to offer safe deposit boxes with a savings or checking account. Digital banks cannot provide this service.

The Epoch Times copyright © 2024. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.