Do you fall in the bracket of people who have one bank and many accounts or do you have money in many banks? Your decisions about banking can help you gain money by just knowing where to put your money.
The Advantage of Having One-Bank:
- Do you fall into the first group of people described before (have one account for all your funds)? Have you kept the first checking account that came with your first job for free and never bothered to change banks since? If you have, you are not alone. Simplicity is the biggest advantage of keeping all your savings and checking accounts in one bank. You only have to remember one set of login information, and you only have to visit one bank to get all your bank work done. Its simple and clean.
- However this approach may not be beneficial to you as your financial life changes. There are many reasons that opening accounts at different banks may be advantageous to you, as long as you pick the banks that suit your needs.
Questions to Ask Yourself While Deciding If and Why Multiple Banks Might Be Better for you?
- How great is your will power?
- Could You Get a Better Rate?
If you are thinking of putting money in a Savings Account for an emergency fund, you should make sure that you are getting the best rate possible. You have to do some research to find a bank with rates that are favorable to you. Once you have done this it is simple to transfer your savings account, and chances are that you will not be charged for closing an account at a bank.
If you are trying to save money it is a good idea to get a separate account for your savings. This will help you give a clear picture of how much you are saving. It will also make you think twice when you want to binge on that shopping spree, especially if it takes 24 to 48 hours to free up funds. You might think twice about spending, and end up not spending in the end. - Another advantage of having more than one account is that it avoids confusion in a way and removes temptation. If all your money in the savings is visible to you every time you are simply checking the balance on your checking account, there are more chances are that you will be tempted to spend the money.
However, if you feel that it is more organized to have just one bank for all your needs, and it seems like a hassle to check accounts on multiple sites, there is a way around it. LearnVest Money Center is a free method to monitor all of your accounts in one place. You can use it to check the balances without the temptation to spend. - What Will It Cost You?Moving savings account isn’t nearly as difficult as changing checking accounts. This is because most likely your checking account is linked to a network of automatic payments and debits such as your utility bills. Also, it can cost you to change checking accounts: the bank will most likely charge fees and sheer inconvenience charge. It can also be time-consuming and complex. First of all you need to maintain a minimum balance until the account is closed to be sure you aren't charged fees, your money is transferred in full, your automatic payments and linked accounts are switched, your debit cards and checks are issued, and that you have cleared up all the necessary tax documents.
- Do You Need to Spread Your Money Around?If you are one of the lucky ones who have lots of cash on hand, think about what is the maximum amount you can keep in one account that will be guaranteed to be safe. Federal Deposit Insurance Corporation (FDIC) protects your money in the unfortunate event of the bank going into bankruptcy. As long as your bank is FDIC-insured, they will ensure that up to a deposit of $250,000 per person and $500,000 for joint accounts, is ensured. In case of bankruptcy, FDIC will not pay you any more than that no matter how much was in your account. This means that it is a good idea to not keep all your eggs in one basket and go ahead and spread the wealth across various banks.
How Do I Know If a Bank Is Right for Me?
The perfect bank is defined differently for different people. It all depends on you. Other than the numbers, such as interest rates and available ATMs, people prefer certain banks for completely personal reasons. For example, some people find it much more comfortable to have the option of going to a physical bank to do their banking. So once the basic criteria have been met, such as a good interest rate, comparatively fewer fees etc., the final decision boils down to which bank you find the most comfortable.
Other Useful Reads :
- Savings Bank Accounts v/s Current Accounts
- Steps to Develop a Healthy Saving Habit
- Which Type of Account Is Usually the Most Liquid?
- Does Your Returns Get Affected by Auto Sweep Accounts?
- Banking Mistakes You Cannot Afford to Make
- What is Inactive or Dormant Bank Account?
- NRE Savings Account v/s NRO Savings Account
- Top 7 Smart Money Saving Tips
- Top 8 Money Management Tips Even During Job Loss
FAQs on Should I Go for One Bank or Many When it Comes to Keeping my Accounts
- Is it better to keep your money in more than one bank?
Yes, it is good to keep money in multiple bank accounts as it has various benefits. If you make transactions like direct benefit transfer from government, pension account, tax payment and refunds, etc. from separate bank accounts, it will help you track your transactions easily. Apart from this, Unified Payment Interface (UPI) has set a transaction limit. So, if you have multiple bank accounts, you can do as many transactions per day as you want. Same goes with the Automated Teller Machines (ATMs) cash withdrawal.
- Should I have all my accounts with the same bank?
Usually, it is safe to keep your money in one bank. However, if your amount of money exceeds the deposit limit set by the bank, a certain part of your deposit amount will not be protected in case the bank fails. Moreover, if you want to enjoy multiple benefits provided by different banks, it is advisable to have separate bank accounts.
- How many bank accounts should I maintain?
There is no limit set to how many bank accounts you should have. However, it is advisable to have less than four bank accounts per person because it becomes difficult to manage money in multiple bank accounts.
- Is there any problem with having multiple bank accounts?
Although saving money is multiple bank accounts has lots of benefits. However, there are many disadvantages too. Saving money in multiple bank accounts will lead to the loss of interest as many bank provides higher interest rates on higher bank accounts. Apart from this, there are issues like maintaining minimum account balance on all the banks.
- Should you keep all of your bank accounts at one bank account?
It is typically secure to save all of your money at one bank. A portion of your deposit amount won't be safeguarded in the event that the bank fails if it exceeds the bank's maximum deposit amount. Also, it is advised to have separate bank accounts if you want to take advantage of the many incentives offered by various banks.
- Should you open multiple accounts with different banks?
Less than four bank accounts are recommended per person because managing money in several bank accounts can be challenging.
- Tips for managing money at multiple banks
It will be easier for you to keep track of your transactions if you conduct transactions like direct government benefit transfers, pension account payments, tax payments and refunds, etc. from several bank accounts. The UPI has also established a transaction restriction. Hence, if you have several bank accounts, you can make as many transactions as you like each day. The same is applicable for cash withdrawals from ATMs.
- Should I keep accounts at multiple banks?
Yes, you can keep accounts like savings accounts or Non-Resident Ordinary (NRO) accounts at multiple banks.
