10 Advantages of Using Multiple Financial Institutions

Bank mat

I have several acquaintances that do all of their banking with one institution. (Typically it’s the bank that holds their mortgage or where they have a large investment account like an IRA or 401K.) They use that one bank for everything from paying the bills to loans to retirement savings. In some cases, they don’t even have multiple accounts or types of accounts at that one bank. They just have all their funds lumped into one big “checking account.”

Certainly it’s convenient, but keeping all of your money at one institution carries many risks. If a single things goes wrong with that one bank or one account, you could face financial hardships while everything i

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5 Responses to 10 Advantages of Using Multiple Financial Institutions

  1. Aleta says:

    Your article was on target. I have various accounts with brick and mortar and online banks for the reasons that you stated. I once remember Jeffrey suggesting to not close an online account even if you only left a dollar there. Reason is that when rate rise you want to be able to move money quickly without having to set up a new account again.

    I watch the news and ratings services for bank safety and those having financial problems and I transfer a large portion of that money to another bank but keep the minimum to not have fees.

    My local acccount are for the monthly and everyday bills. The other accounts are used for savings and escrowed payments.

  2. jay says:

    Totally agree, but with a caution: Keep excellent records.

    I am now, as executor, having to deal with a rather chaotic mess left behind by a relative. The only good news was a [partial] record of passwords, etc. As to financial accounts: only hoping there’s ultimately a paper trail to follow!

  3. patientsaver says:

    You could wind up paying more fees, and earning less interest, by divvying up your assets into small piles that fall below certain thresholds, whether it’s mutual funds (eg Vanguard Admiral Fund Shares) or bank accounts.

  4. Interesting thought for sure! I use multiple institutions, although it was by accident at first. I am glad that I do now. It seems like the smart way to go for sure.

  5. Spokane Al says:

    While your ideas have merit, as my wife and I have moved into our 60s and are now retired, we have transitioned from several financial institutions to just two – a credit union for our banking needs and Vanguard for all of our investment needs. Dealing with only two institutions simplifies taxes, record keeping and provides piece of mind if/when one of us passes on.

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