THE BAIS HAVAAD HALACHA JOURNAL: Volume 5776 Issue XXXIV Bechukosai BANK ACCOUNTS IN HALACHA Are bank accounts treated as tangible assets or as an outstanding loan to a financial institution? By: Rabbi Shmuel Honigwachs
Loan or Deposit?
Thanks to modern-day banking, most of us can rest assured that our savings will not be lost due to theft or other natural causes. In the US and elsewhere, the government puts our minds at an even greater ease by insuring a certain amount of money in an account against the possibility of a bank default. Although our money is pretty much guaranteed at the bank, nevertheless, according to Halacha, it may be considered to be only a loan to the financial institution and not a tangible asset that is in the possession of the owner. This is because there is still a possibility that the account holder will not get his money.
Such was the unfortunate fate of my friend, who was exceedingly wealthy before the financial crisis of 2007. When he realized that some of his investments were going south, he tried his best to pull out and place the money in savings accounts. The problem was that the banks themselves were going bust, and the FDIC only insured up to a certain amount per person per bank. He ultimately lost a large amount of money because he had nowhere to put it.
This real-life example proves that a bank account is not really all that secure. In fact, even the amount of money that is FDIC insured, would not be considered to be a “Pikadon” (deposit), a status which is accorded to an actual object that was given to be guarded. Most Poskim (and perhaps all Poskim) would still consider the insured funds in the bank account as a mere Halva’a (loan).
This classification may have serious implications in Halacha. Whereas tangible assets, such as cash we hide under the mattress, will be subject to many of the basic rules stated in Shulchan Aruch; money that is owed to the person – as secure as it may be – is often subject to a different set of rules. In this article we will provide some examples of such cases and analyze the practical applications of the Halachic status of a bank account.שעבדנא לך לדידך ולכל דאתו מחמתך
Loan or Deposit?
Thanks to modern-day banking, most of us can rest assured that our savings will not be lost due to theft or other natural causes. In the US and elsewhere, the government puts our minds at an even greater ease by insuring a certain amount of money in an account against the possibility of a bank default. Although our money is pretty much guaranteed at the bank, nevertheless, according to Halacha, it may be considered to be only a loan to the financial institution and not a tangible asset that is in the possession of the owner. This is because there is still a possibility that the account holder will not get his money.
Such was the unfortunate fate of my friend, who was exceedingly wealthy before the financial crisis of 2007. When he realized that some of his investments were going south, he tried his best to pull out and place the money in savings accounts. The problem was that the banks themselves were going bust, and the FDIC only insured up to a certain amount per person per bank. He ultimately lost a large amount of money because he had nowhere to put it.
This real-life example proves that a bank account is not really all that secure. In fact, even the amount of money that is FDIC insured, would not be considered to be a “Pikadon” (deposit), a status which is accorded to an actual object that was given to be guarded. Most Poskim (and perhaps all Poskim) would still consider the insured funds in the bank account as a mere Halva’a (loan).
This classification may have serious implications in Halacha. Whereas tangible assets, such as cash we hide under the mattress, will be subject to many of the basic rules stated in Shulchan Aruch; money that is owed to the person – as secure as it may be – is often subject to a different set of rules. In this article we will provide some examples of such cases and analyze the practical applications of the Halachic status of a bank account.שעבדנא לך לדידך ולכל דאתו מחמתך
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