Breaking Up with Your Bank
When does it make financial sense to move your dollars and cents?
Most Americans are loyal to their banks – even if their banks aren’t very loyal to them.
A new survey from GoBankingRates shows that 54 percent of us keep all our money in one bank, while 27 percent split their money between two banks. Why do that?
“You can get the most out of your money,” GoBankingRates says. “If you’ve stuck with one bank out of habit, you might be missing out on opportunities to pay less, earn more and take advantage of some of the best bank account features and promotions.”
One common split is between a commercial bank with lots of ATMs and a small credit union that offers better rates on car and home loans. Also popular among Millennials is splitting money between a big bank with many branches and an online-only bank that offers better savings rates.
Dividing isn’t always conquering
Of course, splitting your money between two banks has its drawbacks, too.
“You might find multiple banks and accounts confusing,” GoBankingRates says. If you’re not the most organized person, this could end up costing you instead of saving you. That’s because, “Many banks have minimum balance requirements for customers to qualify for perks, like getting a monthly maintenance fee waived or snagging a higher interest rate.”
So if you don’t keep track of your accounts, you could end up forgoing those perks or even paying penalties.
Shifting instead of splitting
You don’t need to do business with two banks to maximize your money. You can simply move to another institution. Many Americans are reluctant to do so, because comparing all the requirements between two banks can be so daunting.
Instead, focus on the big-ticket items. To make it even easier, these factors are listed in order of importance…
- What are the minimum balances I need? Even these can get confusing. Sometimes, it’s an “average daily balance” of $500. Sometimes, it’s a monthly average of $750. And sometimes, it’s combination of both. Whatever it is, make sure you can comfortably hit these benchmarks.
- What are the financial benefits? Some banks offer significant cash back or reward points for using their debit cards. Others offer higher interest rates on savings and checking accounts. If you can keep those minimum balances, adding up these benefits is free money.
- What are the conveniences? Are there branch banks near you? Lots of ATMs? Is mobile banking an option? Don’t get obsessed with conveniences, however. If you can’t keep a minimum balance, and if the benefits are paltry, you’ll actually be paying for those conveniences.
For other savings advice, check out Consolidated Credit’s How to Save Money Consistently and Effectively.