Are you worried about keeping all your hard-earned money in one place? If yes, then you should consider opening multiple savings accounts at various banks.
Most people only open one account at their local bank or credit union. While having a single account makes things easier, it also limits your access to other financial services.
For example, you might not be able to get a mortgage or a loan from another bank. Opening multiple accounts mean you can spread out your deposits across several institutions.
You can choose to deposit your funds into a checking account, a savings account, or both in multiple institutions.
The key thing to remember is that each type of account with each different bank has its benefits and drawbacks. For instance, some savings accounts pay higher interest rates than checking accounts.
We look at the benefits and drawbacks of keeping all your money in accounts at one bank in this article and why in most cases, it’s not always the smartest thing to do.
Why Do People Stick With One Bank?
If you’re wondering why people stick with just one bank, there are two main reasons: convenience and security. Many people like the idea of being able to check their balances online or through one app on their phone.
They also enjoy the simplicity of knowing they have exactly $1,000 in their savings account. And finally, many people feel more secure when they keep all their money in one place.
However, if you’re looking for a better deal on your banking fees, you may want to consider opening accounts with different banks.
You’ll still be able to use those same apps and websites, but you won’t need to worry about transferring money between accounts.
Is It Worth Opening Multiple Bank Accounts?
The answer depends on where you live and what kind of banking options you have available to you. Let’s take a closer look at some pros and cons of keeping your money in one bank versus spreading it around.
Pros Of Keeping Your Money In One Bank
Convenience – Most people prefer to keep their money in one place because it means they don’t have to think about managing separate accounts.
It also saves them time by avoiding the hassle of transferring money between accounts.
Security – Since you’re putting all your money in one trusted bank, it can be harder for someone else to steal it. This is especially true if you’re using a debit card instead of a credit card.
Cons Of Keeping Your Money In Just One Bank
More Fees – Some banks charge monthly maintenance fees for maintaining multiple accounts with them. These fees can add up over time and make your finances less convenient.
Why Should You Spread Your Money Between Several Banks?
Better Interest Rates – If you’re interested in earning extra income, you should consider investing in stocks and bonds.
However, you can’t earn as high of returns if you keep all your money in one account with one bank. By diversifying your investments, you can get access to a wider range of investment opportunities.
Flexibility – When you spread your money across several banks, you can move your money from one account to another whenever you need to.
This makes it easier to save for big purchases without having to wait until the end of the year.
When it is to transfer your money from savings to checking, the more likely you’ll do it and those savings will run low quickly.
If you knew you would have to wait between three and five business days to get that money, you might think you don’t need that new purse as much as you thought.
This step gives you more time to consider whether you should be spending or saving.
One Bank is not Likely to offer the Best Product In Each Category – You need to go to different banks to get the best products in each class.
For example, if you want the best checking account, you’ll want to go to a bank that offers the best checking account. If you want the best savings account, you’ll want a bank that offers the most competitive interest rate.
And so on. In most cases, online banks are better for checking and savings accounts, yet credit unions are better for auto loans.
You’re Close to Reaching Insurance Limits – You should spread your money across different banks and credit unions because if you have over $250,000 in savings, you’ll then still be covered by insurance.
You’ll get FDIC or NCU insurance if your bank or CU is insured. If you have a joint account, and you are both insured, each account holder can get up to $250,000 covered.
That means if you hold a joint checking account where each owner is entitled to 50% of the account assets, you could potentially get up to $500,000 in coverage.
Plus, you get $250,000 worth of insurance per ownership category.
People who want to protect their savings over this threshold, however, should spread them across different institutions.
If your bank goes bankrupt, and you have more than the coverage in there, you’ll still be able to access your money at other places.
If you’re still not sure which option is best for you, here are some things to consider:
Do you already have a checking account? If so, do you find yourself spending too much time managing that account?
Are you comfortable with the idea of having all your money in one bank?
Do you plan on making any major purchases this year?
Are you concerned about identity theft?
How To Choose A Good Financial Institution?
There are plenty of banks and credit unions to choose from, and if you are opening more than one bank account, you need to make sure you are opening accounts in reputable financial institutions.
But how can you tell which ones will give you the best service? Here are three important questions to ask yourself before deciding to a financial institution.
Do People Have Any Complaints About Their Service? If so, find out whether they were satisfied with the resolution. Did they offer any compensation? Were they offered a refund?
Does The Bank Offer Online Banking? Does the bank allow you to access your accounts via mobile devices such as smartphones and tablets?
Does the bank offer 24/7 customer support? How long does it take to get a response? Is the help desk staffed during normal business hours?
Final Thoughts
We hope after reading this article you know why spreading your money over several banks can be beneficial for you in the long run, whether that is because you are near insurance limits, trying to stick to savings goals, or want flexibility between transferring money.
Although many people still prefer to keep all their money in one bank, we promise to spread it across comes with many benefits, so why not open an account with another bank today!
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