The Disappearing Safe Deposit Box (2024)

Once seen as the best way to protect important documents and valuable items, safe deposit boxes are becoming relics of the past.

Why it’s important

Safe deposit boxes rose to popularity in the early 20th century at a time when valuable papers like wills or stock documents and valuables like family heirlooms were more likely to be lost to a fire or stolen. Banks with massive vaults and boxes protected by a two key security system offered wealthy bank customers protections.

The trouble with safe deposit boxes began when bank executives realized that the massive vaults weren’t resulting in any additional income—in fact they barely covered their own operating costs.

Low rental rates and expensive vault construction resulted in little to no revenue for banks. Efforts to up the rental rate for a safe deposit box were met with little success.

Banks began to see competition from home security systems that became more complex and effective at preventing theft. Customers preferred to have their valuables at home—especially when the home security system was more cost effective.

In addition to expenses, safe deposit boxes also posed a legal problem for banks. For example, banking experts were divided on whether or not a bank was obligated to turn over the box even if a customer appeared to be inebriated.

Despite the costs and the legal quandaries, banks kept the programs in large part to promote customer loyalty.

Closing a safe deposit box account requires a client to appear at the bank in person. This extra step makes it more inconvenient to close an account and often results in customers sticking around out of convenience.

However, a major setback for safe-deposit-box programs seems to have come from the 2008 recession. Since the Great Recession, the number of physical banks have declined due to expensive real estate. Banks focused on smaller locations that didn’t have the square footage to account for a safety deposit box. Additionally, valuable documents typically stored in the boxes are now available in a digital format.

Wealthy customers are turning to personalized vault storage rather than relying on the bank. It runs out that safe deposit boxes are not FDIC-insured—meaning if an item is stolen or replaced, a customer has limited ways to recoup the loss.

Though once seen as a safe method for storage, the safety deposit box has mostly become too expensive and obsolete to maintain.