For the most part, there is not much wrong with putting your money in a bank or credit union. We all need the convenience that a checking account offers. But there are a few things to consider before entrusting these institutions with our hard earned savings.

Most banks and credit unions have insurance on their depositors money in the amount of $250,000 per depositor. This does not always mean that you will be paid out or won’t have any trouble accessing your money if that institution collapses. Banks especially in recent years have frequently miss managed their depositors money, which has lead to some of this biggest bank failures this country has ever seen.

One reason for these bank failures, is that they no longer are required to keep any of their depositors money actually on hand. They are allowed to loan out money without keeping any in reserves. This is why they have limits on how much money you can withdraw on any given day, because they may not actually have that money to give you at the moment. The bank can fail when the loans they have out are not getting paid back and when a lot of depositors are asking to withdraw their money out and the banks are not able to give their depositors money back. Isn’t that the purpose of a bank to keep your money safe for you until you need to use it?

In order for a bank or credit union to make money and stay in business, they need to loan out money to earn interest for profit. When you put your money into a savings account, you are allowing them to loan out your money in exchange for them paying you an interest rate. Where the banks have gotten themselves in trouble is when they start to loan out more money then they have received in deposits. This puts a lot of loaned out money in circulation that does not actually exist. This is what inflation is at the root, all banks do it and the federal government allows this to happen!

The last reason why the bank or credit union might not be the best place to save your money is how much your money earns. Each institution has different rates that they pay its depositors, but the average amongst most of them is about 0.25%. They loan your saving out at various rates from 2% to 20% or more, yet they only give you a small fraction of that in return for allowing them to do so. Most of your hard earned money is just sitting in your savings account barely earning anything when it could be invested somewhere else earning much more!