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I don't know too much about banks and banking. But to start off, I have a Chase checking account my parents opened for me since 7-8 years ago.

Now that I'm working, I'm helping my parents buy a house. I want the mortgage and housing transactions to occur in a separate account, but I'm not sure if I should open a separate checking account on my Chase account, or open one at a different bank like BoA, Wells Fargo, Citibank, etc.

Also I have to mention that this new checking account will receive cash deposits each month, for the housing payments. So it would be ideal to have a convenient local branch to commute to i.e., Chase, BoA.

The reason I ask is because I've heard that it's generally better to have separate checking accounts at different banks. But I don't know what reason behind it is, and what I've heard might be wrong.

I've done some research comparing these banks but didn't learn much about the benefits besides sign up bonuses, and account maintenance fees. It seems like the rates are somewhat similar, and are not very comparable.

I just want to know what is the best option I have. Should I open another checking account via Chase, or at another bank. If the latter, then which bank is the most reputable or just better for my situation. Also any suggestions is welcomed.

Thank you

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    I'd suggest a credit union rather than a bank. Likely to be lower fees, and might be easier to find a convenient local branch. – jamesqf Jul 14 at 17:22
  • A possible reason for the advice to use different banks is in case one bank has problems with their systems (see, e.g. this question). – TripeHound Jul 15 at 8:34
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There's no problem in having multiple checking accounts, and separating out the activities of building the house for your parents is probably a good idea. (I've got three checking accounts.)

Presumably you'll be depositing Large checks, so an online bank is out of the question.

Next is monthly fees. Unless you want to park $1,500 in the account and have it sit there doing nothing, Chase will charge you $12/month for the pleasure of having an account with them. BoA, WF and Citibank probably have similar policies.

Thus, I'd look for a local bank or credit union that doesn't have monthly fees.

(Changing subjects: does Chase charge you $12 every month?)

  • Not really correct. Most large banks offer free checking accounts if you have monthly deposits (500/month are typically required), and most offer free checking if you have 500$ minimum average in it. – Aganju Jul 14 at 22:12
  • @Aganju one of the ways Chase waives the fee is to require $500 EDI per month. I'm dubious as to whether or not there will be $500 of EDI (not ACH transfers, but EDI) on an account dedicated to building a house. – RonJohn Jul 14 at 22:19
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    Still other banks(Fifth Third, for example) will waive monthly fees as long as you maintain a checking AND savings account with them -- no balance requirements. My savings account with them currently has a nickel in it and hasn't changed in over 6 months. – Steve-o169 Jul 15 at 15:07
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Contact your bank or credit union to see if you can have two checking accounts.

The credit union I use has allowed a "secondary checking account". That allowed me to run all my income and expenses though the 2nd checking account for my rental property. There was zero cost, and the 2nd account made tracking everything easier. If there was a reason to move money from the personal account to the 2nd checking account, it was very easy to do.

If the existing Chase account can't be accessed from a local branch, then there is a benefit to having the mortgage money in an account that is easy access from a local branch to meet your requirements for cash deposits. If you go this route it is also possible to move money between different financial institutions because most of them offer the ability to link accounts.

I've heard that it's generally better to have separate checking accounts at different banks. But I don't know what reason behind it is, and what I've heard might be wrong.

In the United States the coverage through FDIC or NCUA is for $250K, and it can be higher based on ownership of accounts. As long as the account is FDIC or NCUA insured and the sum of your Chase accounts is under that limit you shouldn't be worried about reputation. Some people spread their money across banking companies if they are concerned about the 250K limit, or they are concerned about tying up all their money in one bank, and having no access if that bank has an issue.

Of course customer service ratings are a different matter and you have to do your research.

  • Are there really banks and CUs that don't allow you to open a second checking account? – RonJohn Jul 15 at 13:21
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You can have as many checking accounts as you like but it makes no sense to have multiple accounts unless you have a specific need for segregating assets such as business and pleasure or as you mentioned, mortgage and personal.

If possible, you want to avoid monthly fees. They can really add up. I have two free checking accounts at different banks with no minimum (15+ and 25+ years) but I don't know if that is still available for new accounts. If you can find a bank that offers that, for convenience, it makes sense to have both checking accounts at one bank.

Convenience comes in all sizes. When my father got into his mid 70's, while he was capable of balancing a checkbook, he liked simplification so he used one bank's checking account for one month and then used another for the next month. :->)

Another possibility might be to utilize a high yield money market account for the mortgage and associated deposits, and if so inclined, link it to your current Chase account. Since mortgage payments are monthly payments, the 6 transaction per month limit might not be a problem, plus you'll earn a decent interest rate (2+ pct).

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The only reason to have accounts at multiple banks is if you are going to hit the FDIC insured limit and want to make sure your deposits are totally insured. Other possible reasons are sign up bonus, no/low fee, and some banks want you to have a checking account if you also have a loan with them. However, it would make your life easier to have everything at one institution if you aren't in the position of worrying about FDIC limits.

There are typically multiple ways to waive monthly fees on checking accounts so I would check with Chase to see if your situation would make for a fee free checking account. Some banks allow the minimum balance to waive fees to be across all deposit products but I do not know the ins and outs of Chase's fee schedule.

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