Your money isn't sitting in your bank.
Don’t panic. You already know this, but here’s your friendly reminder.
When you deposit your money in your bank, your bank uses your money to fund loans and investments.
So your money in your bank is in motion, put to work in the world to finance the economy.
How much money are we talking about?
The public has a lot of money in banks. $11.27 trillion to be exact, equal to about 60% of US GDP.
The total net worth of Bill Gates, Warren Buffett and the 20 wealthiest investors in the US combined is a fraction of the total money America keeps on deposit in the bank.
This money is community capital. 93% of the American public has some money in a bank account.
Americans put trillions of dollars into bank accounts with limited regard for the trajectory of their funds.
Why? Because money in the bank is not equal to money under the mattress. It doesn't just sit there.
Only 10% of your deposit stays in bank. Up to 90% is lent out in the economy.
This money on deposit in the bank -- in checking accounts, savings accounts, CDs, money market accounts and other deposit accounts -- is making an impact.
We all know the simple idea: you and your community put cash into the bank. The bank lends this money out to community looking for a loan. The bank earns interest on the loan, and gives you a slice of the interest gained while keeping the rest for itself as profit.
All the while, the bank keeps enough money on hand so that you can get your cash out whenever you need it.
The story is a bit more complicated in practice. Banks are focused on financing different markets. But deposits in, loans out is a sufficient framework to think about when discussing one of the core functions of a bank.
Consider Bank A versus Bank B.
Community A puts money into Bank A. Twenty eight percent of the money in Bank A is lent to small business owners in Chicago.
Community B puts money into Bank B. Seven percent of the money in Bank B is lent to businesses across the country.
If you want to your money to go towards growing small business in Chicago, you might consider banking with Bank A.
If you're building a small business in Chicago, you might consider banking with Bank A.
America puts 40% of all of its bank money into 0.1% of its banks. The other 99.9% of banks may be of interest to you. You have more bank choices than you may realize.
Chances are, you've never heard of 99.9% of the banks in the country.
America has nearly 6,000 banks. If you include the nation’s credit unions, this is around 12,000 banking choices. You have choices in banks than you may have never considered.