Bank accounts: is it a good idea to keep all your eggs in one basket? Bank accounts: is it a good idea to keep all your eggs in one basket?

Bank accounts: is it a good idea to keep all your eggs in one basket?

There are a lot of account types you can have: checking, savings, business, CD, cash reserve. But is it a good idea to have them all in the same institution? Let’s review the pros and cons.

As everything in life, having all your accounts in the same bank has its advantages and disadvantages. Let’s take a look at them:

Pros 

1-    FDIC covers up to $250,000 for each eligible account

Covered accounts include checking and savings accounts, money market deposit accounts (MMDAs), and certificates of deposit (CDs).
So as long as your balance in each eligible account is below $250,000, it is ok to have them all at the same financial institution. 
You can check if your deposits are insured by the FDIC by using their Electronic Deposit Insurance Estimator (EDIE)

2-    Quicker coverage on bounced transactions

If an automatic debit or credit transaction appears with insufficient funds or a check is bounced and you have all your accounts in the same bank, it’s faster to cover them.

Some banks will give you a quick heads-up early in the morning if they see that a transaction won’t go through due to low balance, giving you time to sort it out.

3-    Lower account fees and higher interest rates

If you hold a large total of deposits in the same institution, you can qualify for better interest rates on your savings and also get reduced account fees.

You can check with your bank if you are eligible to get these benefits by holding all your accounts with them.

Cons

1-    Potential of losing FDIC Coverage

Yes, we know: this is the first thing on the Pros list. But as we said before, FDIC will cover up to $250,000. If you are a high earner and keep all your money in the same institution, anything above that amount won’t be covered.

2-    Higher damage in case of identity theft

If a fraudster gets a hold of one of your accounts or cards and you have all of them together, then it is really simple for them to take over all of them, causing massive loss. By spreading your funds across different financial institutions, you lower your chances of this happening. Of course, it is strongly advised to not use the same password for all of them.

3-    Missing out on potentially better deals

By not keeping track of other financial institutions, you might be potentially losing good deals in one of them. Of course, you can’t be constantly switching from one bank to the other, but it is a good exercise to check the deals regularly and see how good they are compared to the ones you get at your bank.
 

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