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Why You Should Scatter Your Bank Accounts

Banking, Banking Basics, Banks & Credit Unions, Checking Accounts, Savings Accounts
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Why You Should Scatter Your Bank Accounts

Checking and saving accounts go together like bacon and eggs, but both are good separately, too. You don’t need to have all your accounts at the same bank. In fact, you might benefit from splitting them up.

About one-third of people who switched banks recently or wanted to switch had checking and savings accounts at different banks, according to research by bank analytics firm Novantas. And about 11% of bank customers switched banks over the course of a year, based on Accenture’s 2016 North America consumer digital banking survey.

Here’s why it makes sense to scatter your money.

1. Maximize your returns

It’s possible to find a bank account with a decent interest rate despite the national averages— 0.06% annual percentage yield for regular savings accounts and even lower for interest checking, according to the Federal Deposit Insurance Corp. But some online-only banks offer checking rates higher than 0.50% and savings rates north of 1% APY.

You might reach savings goals faster with a high-yield account. Having $10,000 in one with a 1% rate earns you $100 in a year, compared with $6 at the national rate.

2. Take advantage of perks

Some banks offer sign-up bonuses, and credit unions tend to charge lower fees than banks do. Other banks and brokerages don’t charge foreign transaction fees.

Ahmed Bhuiyan, a Seattle-based travel industry consultant, switches between his banks when on the road. He likes one bank’s domestic ATM network but uses a checking account at another bank to avoid foreign transaction and ATM fees.

3. Maintain financial flexibility

Certain bank features make it hard to move your money elsewhere, such as direct deposit and recurring bill payments — so you might end up sticking with a bank you don’t love. To avoid that, consider splitting your direct deposit between checking accounts at two different banks or using alternatives to recurring payments, such as calendar reminders or apps.

Watch out for pitfalls

Money transfers between banks can take two to three business days, and it can be hard to keep track of the bills you pay with different accounts. If you’re not careful, you might overdraw an account.

It’s important to keep all of your accounts fully funded and know where direct deposits go and how to avoid fees on each, says Alicia Butera, certified financial planner at Planning Within Reach in San Diego.

Some financial institutions and third-party budgeting apps make this easier by linking various accounts, so you can see all your money at once.

“Thank God for apps like Mint,” Bhuiyan says. “If this were the ’90s, I might not have all these accounts.”

Spencer Tierney is a staff writer at NerdWallet.com, a personal finance website. Email: spencer@nerdwallet.com and follow on Twitter @SpencerNerd.