With all the banks in the world today, the question arises: should we keep all of our money with one bank? I think not. I have money with two separate banks where I live. These are my reasons why.
1. Different types of accounts
One of my bank accounts is an online bank account. This means that the bank has no branches and you must have a ‘linked’ account with a real-life bank to transfer money in and out of. It’s a great system and it gets me about 7.3%pa interest – that’s a whopping amount.
However, I use my accounts for different things. In total I’ve got four. These four accounts all have one purpose: one for general transactions (including ATM access), one in the real-life bank for savings, one for transferring money in and out of my online bank’s account and my online bank account. This may seem confusing, but it’s a system that works. I’m subconsciously limiting my spending and also earning a ridiculously high interest rate through my online bank account.
2. If your bank goes bankrupt…
The Northern Rock chaos of 2007/2008 saw thousands upon thousands of the banks’ account holders racing to withdraw their funds from the bank which went bankrupt. The UK government eventually agreed to bail the bank out, but not before its customers had deserted the bank for another, more solid bank.
This incident taught us a good lesson about keeping all of our eggs in one basket. What if you had your emergency, savings and retirement funds all with one bank and that bank went bankrupt? You would hopefully be insured, but if you’re not…
Of course, there are reasons why you maybe should put all your eggs in one basket. If your bank is sustainable and won’t be going bankrupt any time soon, it might be a good idea to keep all of your money with one bank. Here are some reasons why:
1. Proximity to your local branch
If you’re in a small town or one with only one bank around, keeping all of your money in one bank might be the only option. If that bank charges high fees, look into keeping enough money in your account to avoid paying the fees. For example, your bank might charge $10 a month to keep the account open, but you might be able to avoid that fee if you keep over a certain amount of money in the account, say $5000.
2. Lots of check transactions
If you write a lot of checks it’s an extremely good idea to have the bulk of your money in one account. This is how you avoid overdraft charges. If you had money half and half in two different banks and wrote a large check, you could get hit with some nasty overdraft fees – this can easily be averted if you have only one bank account.
These are just points to consider, and as always you should consider your own financial situation before making any decisions. Good luck!