A cultural shift among consumers about what is valuable — and where to store it — gradually is reducing safe deposit boxes, both in Connecticut and around the country.
While it’s doubtful that safe deposit boxes will disappear entirely, Connecticut Bankers Association President and Chief Executive Officer Thomas Mongellow said “more new (bank) branches are not having them.”
Laura Waitz, executive vice president and chief of staff at New Canaan-based Bankwell Bank, said that while every one of the financial institution’s 12 branches has safe deposit boxes to rent, only 48 percent of boxes are rented.
Here are some things the Federal Deposit Insurance Corporation recommends you consider when determining where to store important papers and valuables.
Good candidates for a safe deposit box include originals of key documents, such as birth certificates, property deeds, car titles and U.S. Savings Bonds that haven’t been converted into electronic securities. Other possibilities for the box include family keepsakes, valuable collections, pictures or videos of your home’s contents for insurance purposes, and irreplaceable photos.
Be mindful not to use your bank safe deposit box to store anything you might need to access quickly or when the bank is not open. That could include passports and originals of your “powers of attorney” that authorize others to transact business or make decisions about medical care on your behalf. For guidance on where to store your original will, check with an attorney about what is required or recommended based on state law.
You’re better off stashing your cash in a bank deposit account, like a savings account or certificate of deposit, than in a home safe or a safe deposit box. Cash that’s not in an account isn’t protected by FDIC insurance, which only insures deposits in deposit accounts at insured institutions and only in the rare instances when a bank fails. A safe deposit box is not a deposit account. It is storage space provided by the bank, so the contents, including cash, checks or other valuables, are not insured
Read the terms of the safe deposit box rental agreement. The bank may limit what you can keep in the box, including cash.
No safe deposit box or home safe is completely protected from theft, fire, flood or other loss or damage. Consider taking precautions, such as protecting against water damage by placing items in water-safe, zippered plastic bags or other plastic containers that can be resealed. And, don’t keep identifying information on or near your safe deposit box key, such as the box number and the bank’s name, in case of loss or theft.
“Five years ago, it was well above 50 percent,” Waitz said.
Another Fairfield County-based financial institution, Newtown Savings, has safe deposit boxes at all 14 of its branches, according to Tanya Truax, the bank’s public relations director. The bank’s branch network includes locations in Oxford and Shelton.
“We haven’t noticed a marked trend overall in our safe deposit boxes,” Truax said. “We find them to still be relevant for storing original documents and valuables.”
Banking industry surveys indicate the typical safe deposit box renter is 50 years old or older, according to David McGuinn, president of Houston-based consulting firm Safe Deposit Specialists, which advises banks and credit unions.
Waitz said neither of her two sons, who are in their 30s, has a safe deposit box, choosing instead to keep valuables in a fireproof safe at home.
“It’s a generational thing,” she said.
Jerry Pluard, president of Safe Deposit Box Insurance Coverage, said because young people now do all their banking on mobile phone apps, “they don’t view a bank’s physical plant as a necessary feature.” Pluard’s small Chicago-based company sells insurance to individuals who store valuables in safe deposit boxes.
“Many young people are storing important documents on the (computer) cloud,” Pluard said. “But as they start to inherit things from their parents, that may be likely to change. It’s fair to say that millennials don’t use safe deposit boxes at the same rate as previous generations.”
Another reason why fewer branches have safe deposit boxes, Mongellow said, are rules the Connecticut Banking Department has in place when it comes regarding that line of business.
“There’s a lot more reporting requirements,” Mongellow said.
And if a safety deposit box with an individual’s valuables in it has gone unused and unpaid for more than five years, he said the trade group conducts a group auction to dispose of the contents. Banks must bear the cost of drilling into those safety deposit boxes, but any proceeds that come from the auction go to the state treasury, Mongellow said.
“It’s really viewed a loss leader, a customer service more than anything else,” Mongellow said. “Branch sizes are getting smaller, thanks to mobile and online banking, and that’s making them (safe deposit boxes) a little more difficult to find.”
The number of bank branches nationwide over the last decade has decreased by 10 percent , according to a February 2018 report from the Federal Reserve Bank of St. Louis. And since most bank chains don’t have a safe deposit box in every branch, that makes it even harder for customers to find a convenient location.
But that hasn’t stopped a number of Connecticut residents from continuing to rent them.
Cheshire resident John Connell recently rented a safe deposit box from Naugatuck-based Ion Bank, which has 23 branches in northern New Haven County and central Connecticut.
“It was easy and the right size,” Connell said.
Another Cheshire resident, Kiki Nichols Nugent, said her mother had safe deposit box at one time, “but if there was more than one person’s name on the box, both of you had to be present in order for you to go into it.”
“She didn’t like the inconvenience of that,” Nichols Nugent said.
John Carusone, president of the Bank Analysis Center, a Hartford-based industry consulting firm, said conventional wisdom has been that safe deposit boxes offer financial institutions an opportunity to establish a relationship with consumers and businesses that they might not otherwise get. But remaining competitive in today’s banking environment, Carusone said, “means banking smarter, banking leaner and using less capital.”
Capital One, the McLean, Va-based banking giant, stopped renting new safe deposit boxes in 2016, according to Pluard.
“If you have a box at Capital One, you can keep it,” Pluard said. “But if they close the branch where your safe deposit box is, you have to come get them and find a new place to keep your valuables.”
Capital One has automated teller machines in Connecticut, but according to the bank’s website, its only full-service branch is in Branford.
McGuinn contends the nation’s largest banks are eager to get out of safe deposit box business.
“And they are spreading a myth that there is a decline in their usage in order to make it happen,” McGuinn said. “I don’t how you can claim to be a full-service bank and not offer safety deposit boxes.”
That’s a claim that at least one of the nation’s largest banks doing business in Connecticut — Bank of America — denies.
Don Vecchiarello, a senior vice president and communications manager with Bank of America, said the North Carolina-based financial institution “continues to offer safe deposit rentals in various financial locations throughout Connecticut and the nation.”
But a recent visit by one couple to a New Haven County Bank of America branch to pay for their annual safe deposit box rental would suggest there is a certain level of eagerness to get out of that line of business. A bank employee suggested the couple could save money by purchasing a home safe and no longer rent a safe deposit box at the branch.
Pluard’s business has been around for about a decade and he estimated there currently are about 50 million safe deposit boxes at banks and credit unions around the country.
“About 50 percent of those boxes are rented,” he said. “That has been fairly stable for the past decade, although it may have decreased slightly. But there is no industry, no centralized organization tracking this.”
Which leads to a rather large spread in estimated safe deposit box usage.
Based on Pluard’s calculations, there are about 25 million safe deposit boxes in use. McGuinn’s estimate puts that number at about 8 million.
McGuinn said banks that view safe deposit boxes as more of a bother than a benefit are missing out on an opportunity to boost their bottom line.
The income level among box renters is 14 percent greater than the national average, and 42 percent are college-degreed professionals, he said.
“This market group is 16 percent more likely to avail itself of additional financial services offered by an institution,” McGuinn said.
Those who don’t rent safe deposit boxes typically are younger, blue-collar workers with less education and lower income, he said.
Pluard said many of the safe deposit boxes that remain empty are the smaller ones..
“For people who want to rent boxes that are larger sized, particularly in the New York area, there are waiting lists,” he said. “For people who are storing large assets in Manhattan, you’ll wait many years to find one.”
A small safe deposit box typically is 5 inches wide, 12 inches long and about 3 inches deep,according to Smart Asset, a New York City-based financial technology company.
The largest safe deposit box is 10 inches by 10 inches and two feet deep.
One of the major limitations of using a safe deposit box, Pluard said, is that access is limited to banking hours. That has led to a new trend in the past three years: Private safe deposit boxes.
During that time period, the number of privately operated safe deposit box locations has gone from 10 to as many as 60, he said.
“Most are of them are in the West Coast,” Pluard said. “They have broader hours and ability to schedule later appointments.”
Whether consumers have a safe deposit box with a bank, a credit union or one of these new private entities, one thing they all have in common is a lack of insurance, he said.
That’s where Pluard’s business comes in.
“The banks don’t insure the contents at all, he said. “The only way you can recover anything is if the banks are negligent in the handling of the valuables in you box. And even then they are going to fight you tooth and nail to limit what you can recover.”
Desiree Wolfe, a senior vice president of community banking and director of product management at Webster Bank, said the Waterbury-based financial institution saw seven percent year-over-year growth in safe deposit box rentals until 2017. The last two years, Wolfe said, growth in the rentals at Webster’s branches has fallen to about one or 2 percent.
She cited an increase in the availability and affordability of home safes as one reason for the decline.
“Some of that need has been supplanted by ability to go to Costco or BJs and get a good fireproof safe,” Wolfe said.
About 50 percent of Webster’s available safety deposit boxes are rented, she said
Another factor, Wolfe said, is safe deposit boxes are not available at every branch location.
“They tell us the (branch) location they want and if we don’t have any availabilities, we offer them an alternative,” Wolfe said. “But some peope don’t want to drive too far.”
Lindsay Nan said she recently rented a safe deposit box at the Wells Fargo Bank branch on Route 5 in Wallingford.
“My regular bank, Liberty Bank, had none available,” Nan said via social media. “I had to open a basic savings (account) to get a box.”
While some banks require that individuals who want to rent a safe deposit box have an account, others, such as like Key Bank and Webster, don’t.
Karen Crane, senior communications manager in Connecticut for Key Bank, said while it is not a requirement, officials with the financial institution recommend having another account with the Cleveland-based financial institution “for the convenience of automatic deduction of the rental fee.”
“A rental fee can also be paid through another method if the renter does not have or want an account,” Crane said. Key Bank, which has 59 branches in Connecticut, offers safe deposit boxes in 39 of them, she said..
Webster doesn’t require consumers to have an account at the bank, either, if they want to rent a safe deposit box, according to Wolfe. But she said 98 percent of those who rent safe deposit boxes at the bank also have an account there.
The rental fee for safety deposit boxes at Webster is the same across its four-state network of branches, she said. The smallest box Webster offers is two inches by five inches and costs $60 a year to rent.
