Where Does Bank Keep Your Money?
Banks use your money to make money. Banks deposit reserves at the Federal Reserve for interest. They keep little cash in vaults, just enough for transactions. Banks make money through interest, interchange fees, and account fees. Understand risks in bank investments. Seek banks with values aligning investments. You can withdraw any amount of cash from bank accounts legally. Withdrawing over a limit requires reporting to the IRS. FDIC insures deposits up to $250,000. Exceeding this in one bank leaves excess uninsured. Notify banks immediately of unauthorized charges for most reimbursement.
What Does Banks Do with Your Money?
Banks keep your money in reserves for lending and investments. Most reserves go to Federal Reserve for interest. Banks lend out about 85 percent of deposits to make more money. Your deposits become bank property for lending. Treasury bills are one safe investment for banks. Banks make money on checking via the spread between interest paid and reinvested. Keeping under $250,000 in an account ensures full FDIC coverage of deposits. Hide extra cash securely at home if needed.