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Suppose you are expecting (for example) to buy a 1M house in cash. Before you find the house, you keep the 1M in four different bank accounts with 250K each in order for them to be FDIC insured (this is in the US). But when you actually buy the house, do you have to first put the money into a single account, or can you pay from the different bank accounts all at once?

I'm not sure if it's paranoid to have 1M in well-established bank like Chase or Citibank for a few days. On the other hand, I don't know if would cause any problems to try to coordinate moving the money from four different banks at once. Presumably people frequently pay this (or more) for houses in cash, so is there a standard way to deal with this issue?

edit: The money is distributed among online savings accounts. So one could ACH transfer the money all to my one central checking account (for free), or wire the money from each of the individual accounts but that would cost $100. This is maybe only a minor expense, considering, but anyway I'm more interested in what "is usually done" and perhaps that is just wire transfer from each account (?)

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    Can you just write four different checks? – Dilip Sarwate Sep 12 '20 at 16:50
  • @DilipSarwate no because they are not checking accounts. I updated my question. – Fully Insured Sep 13 '20 at 12:09
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Typically a wire transfer is used to move a large amount from a bank to an escrow agent. The escrow agent should have no problem receiving wire transfers from several banks, as long as they’re all received by the deadline. Wire transfers are generally processed within a few hours if they’re requested in the morning, and next day if requested late in the afternoon.

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They don't want cash. And they don't want a personal check. So they will want cashiers checks. They shouldn't have a problem with 4 of them, but let them know in advance.

The biggest problem will be coordinating getting 4 checks from 4 different financial institutions. I would call them to make sure it can be done on your schedule. This is especially true this year because some bank lobbies are only open by appointment.

The risk of the bank collapsing while you have the money in one account is slim. If you did decide to move all the funds into one bank, that will simplify settlement day.

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You can have up to $500,000 insured by FDIC in a single joint account ($250K per owner).

FDIC is also not your only option. Some banks are also members of DIF (http://difxs.com), which ensures desposits above and beyond what FDIC covers. It is private insurance, rather than being backed by the federal government, but just as mhoran_psprep points out the low risk of a bank failure while waiting for your cashier's check to clear, there's an even lower risk of both your bank and DIF failing during the same window.

(I don't know how common it is for a bank to be a DIF member, having just learned of its existence a few minutes ago. I was surprised to see that my current bank is, though it's not clear if any of the other banks I have used in the last 20 years or so are.)

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