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When you’re looking for a place to store cash, important documents or other valuables, a safe deposit box is one option to consider. Safe deposit boxes can be an alternative to keeping a safe at home, although they may not be right in every situation. Before signing up for a safe deposit box, it’s helpful to understand how they work, what they cost and when it makes sense to use one
A safe deposit box is a secure container that you can rent to store important items. These boxes, which can be rented at either brick-and-mortar banks or credit unions, come in different sizes and are typically made of metal. Depending on the financial institution, they can be as small as 3 x 5 inches or as large as 10 x 15 inches.
Safe deposit boxes can be used to store items that you may not want to keep anywhere else, including a home safe.
Having a safe deposit box could offer reassurance if you’re concerned about any of your valuables being lost or stolen or documents being destroyed. For instance, if you’ve drafted a last will and testament or trust document, you may want to give a copy to your estate planning attorney and keep another copy in your safe deposit box.
The same could apply if you’ve drafted important contracts for a business you own. In a nutshell, safe deposit boxes are a way to ensure that your valuables are physically safe and secure in the bank’s keeping.Safe deposit boxes can be used to store a number of items, but banks can impose guidelines on what can be kept inside them. Some of the things you might add to a safe deposit box include.
When you open a safe deposit box, the bank should present you with a lease agreement spelling out how long you’ll have access to the box, what you’ll pay for it and what you can or can’t add to it. The lease agreement may also include a clause stating that, if the bank believes the contents of the safe deposit box are unsafe, they can force it open and dispose of whatever is inside, charging any disposal fees to you.
Technically, you could keep cash in a safe deposit box, but the FDIC doesn’t advise it. This mainly has to do with the limited protections extended to safe deposit boxes. But it’s also important to remember that cash sitting in a box isn’t earning interest the way it could if you kept it in a savings account, money market account or certificate of deposit account instead.
Safe deposit box fees can be charged monthly or annually, depending on the terms of the lease set by the bank. At the lower end, you may pay around $40 a year for the smallest size safe deposit box. At the higher end, the largest boxes could cost you upward of $300 a year, depending on the bank.
For example, the agreement may specify that the annual rent must be paid in full one year in advance. If rent for a safe deposit box isn’t paid on time, then an additional late fee or penalty could kick in. And if you lose your keys to the box and the bank has to have a locksmith open it, then you may be responsible for those fees as well. Failure to pay rent could result in the bank terminating your lease contract.
It’s possible to open a safe deposit box with more than one person. This can be done initially when the box is leased. In that instance, all parties involved are considered co-renters.
Renters also can be added after the fact. This usually involves the new renter’s visiting the bank, providing ID and signing paperwork agreeing to be added as a co-renter. In either case, co-renters would each have their own key to the box and be able to store things inside it.