In this era, sadly, banks are corrupt, unstable, offer horrible customer service, and in many cases, are downright criminal. Regardless of this, you need to use banks in order to conduct business. They are necessary evils.

However, that doesn’t mean you should use them for everything. You need to use banks for the minimal functions a bank requires, and nothing else. For all other financial functions, you should use credit unions, investment firms, and/or your own storage (be that a safe, cryptocurrency, or whatever).

This is for several reasons. First, there is a legal precedent that states that if you deposit money into your bank, that money stops being your money and starts being the bank’s money. People are under the mistaken impression that money in the bank is “their money.” Well, actually, it isn’t. At least not according to the law.

In terms of the law, when you deposit money into a bank, you are lending that money to the bank. The money they “owe” you they can legally default on if they have any problems. It’s not your money anymore.

“But the government insures my money! That’s what the FDIC is for!”

Nope. Banks in the USA have approximately $9 trillion in insured deposits. Guess how much the FDIC has? $25 billion. Do the math. That means that the FDIC has only 0.2% needed to cover all the deposits in all American banks. And that’s just the United States; many other countries are far worse off.

As always, trusting big government to protect you is never a good idea. Ask the American Indian if you don’t believe me.

In terms of what you should use banks for, banks should only be used for business checking accounts and any short-term personal checking accounts easily linked to business accounts. That’s it. You should not use a bank for anything else.

Most credit unions and investment firms won’t let you start business checking accounts there. So for your business checking account, you’ll need to use a bank. You can also set up a personal checking account at that bank if that makes it easier to withdraw or manage funds from your business bank account.

However, I recommend that you don’t leave any money in a bank for any reason for longer than about six months. Consider banked money as a very temporary holding bin until you either spend it or transfer it into short-term savings (like to pay taxes or some other near-future event), longer-term savings, or investments.

For savings accounts, don’t use a bank. Use a CD or similar at a credit union (worst), a money market account at an investment firm like Vanguard, Fidelity, Charles Schwab, and so on (much better), or if you consider it more speculative savings, a savings account or CD at a foreign bank outside of your country where you can get much higher interest rates (good but complicated).

The bottom line is that long-term money should never be sitting in a bank. Your money is safer and will multiply faster if you keep it out of a bank. Just use a bank for operating cash and transactions.

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