9

I have two bank accounts (checking and saving), some credit cards (3), a mortgage, an investment account, and an individual retirement account. Right now all of those accounts except two of the credit cards are held at the same bank.

I did that to have some advantage in negotiating a better rate on my mortgage, and I think it did.

Are there drawbacks to having nearly all my accounts with the same bank, or is it just fine?

6

http://www.fdic.gov/deposit/deposits/index.html FDIC currently insures up to $250,000. (I would have put that as a comment to Jeffery but it says it was locked.)

You don't want to put all your eggs in one basket. If you shop around, and keep shopping all the time you can keep your accounts in a single place so long as that single place provides the best deal. Don't have any loyalty to your banking institutions because they don't have any loyalty to you. Also, having lots of accounts means you are familiar with lots of institutions, so you are likely better at shopping around.

Things I consider.

For fewer institutions:

  1. Best rates
  2. Package deals, getting bigger discounts
  3. Better negotiation because you have much business with that bank
  4. Ease of managing accounts and summary statements
  5. Fewer phone calls to make in the case of emergencies

For more institutions:

  1. Less people know my full financial history
  2. Less danger if any single bank is compromised
  3. I can play banks offers off of each other (price matching or beating by 5%)
  4. More and varied accounts helps with credit score (I think)
  • Nice: You make some very good points in favor of both strategies :-) Makes me think a good approach could be having nearly everything at one bank, with an extra bank account and an extra credit card held elsewhere. – Chris W. Rea Dec 7 '09 at 2:03
  • I didn't mention the sneaky stuff like lots of accounts make it easier to hide info and money from your mortgage company if you are negotiating a loan modification. – MrChrister Dec 7 '09 at 8:39
4

For personal accounts, I can't imagine that this is too much of a problem. The only concern that I can think of (for American banks) is that FDIC only insures you up to $100,000 if the bank were to go belly-up. If you're getting over that amount of money, you may want to "diversify" a little more.

3

Here's my answer for what it's worth:

  • My money management accounts - checking, savings, line of credit and primary credit card accounts - are all with the same bank. The convenience of being able to shuffle money between them online with no delay or hassle is worth much more than any differences in services or interest rate.
  • My mortgage is with the bank which quoted me the lowest rate for the terms and conditions I wanted. The cost of even a tiny difference in interest rate on a mortgage is so huge that no convenience is worth it.
  • My investments are managed by a guy I trust personally. Again the cost of even a small difference in rate of return is big enough to outweigh any convenience considerations.
  • My secondary credit card is with a different bank because I wanted one Visa and one Mastercard, and my bank didn't have both as no-fee options.
1

I've had all my account with the same bank for all my life.

Generally, the disadvantage is that if I want some kind of product like a credit extension or a mortgage, I have the one bank to go to and if they don't want to help me I'm out of luck.

However, occasionally there are also perks like the bank spontaneously offering you increased credit or even a whole line of credit. They can do this because they have your whole history and trust you.

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