Is It Bad To Bank With Multiple Banks?
Today, there is no shortage of banks out there. As of 2023, the U.S. was home to more than 4,700 FDIC-insured banks. With so many options available, picking just one bank can be difficult, and it prompts the question: Is it bad to bank with multiple banks?
Spoiler alert: It isn’t! There are actually quite a few perks to banking with more than one financial institution. Let’s explore them in detail and touch on what you need to do to make the best multi-banking experience.
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A Wider Range of Financial Products and Services
Every bank has its own suite of offerings and opportunities and you may be able to tap into more by banking with multiple banks.
“Different banks may offer varying interest rates on savings accounts, checking account perks, loan options and investment opportunities,” said Taylor Kovar, certified financial planner (CFP), founder and CEO at 11 Financial. “By diversifying across multiple banks, you can take advantage of the best offerings available in the market.”
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Spreading Funds Helps Mitigate Risk
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“Spreading funds across multiple banks helps mitigate risk and ensures greater financial security,” Kovar said. “In the event of a bank failure or disruption in services, having accounts at different institutions provides safeguards against potential losses. Federal deposit insurance, such as the FDIC in the U.S., typically covers up to a certain amount per depositor per bank, so spreading funds across multiple banks can maximize insurance coverage.”
You Can Tap a Variety of Perks
Banking with multiple institutions enables you to tap into an ample — if not nearly endless — variety of rewards and benefits.
“For example, one bank may offer cashback rewards on debit card purchases, while another provides higher interest rates on savings accounts,” Kovar said. “By strategically allocating funds and transactions across multiple accounts, consumers can maximize their earnings and take advantage of perks such as sign-up bonuses, waived fees and enhanced customer service.”
You Can Cash in on Introductory Bonuses
Many banks boast introductory bonuses when you open a new account, typically for people who are new to the bank. You can cash in on these by opening accounts with different banks.
“In order to take full advantage you’ll have to open accounts at multiple banks,” said Scott Lieberman, founder of Touchdown Money. “I recommend keeping a spreadsheet of all the accounts you have and the bonus offers to track progress and make sure you don’t miss out on any free cash.”
Potentially Useful for Frequent International Travelers
“If you travel, it can be helpful to have one home bank and one bank that you can access when you’re on the road,” Lieberman said. “Most local banks won’t have a branch internationally, so you may run into foreign transaction fees. You can avoid this by opening an account (prior to traveling) at a bank that has ATMs and branches nationwide or worldwide.”
Be Discerning, Proactive and Strike a Balance
Though banking with multiple banks comes with a bunch of pros, doing so isn’t without some due diligence on your part. You need to be committed to the multi-banking experience and learning how each bank (or the product or service you’re enrolled in) works. You should also be sure to take full advantage of your respective bank’s offerings that can help you manage your money wisely.
“It’s important to strike a balance to avoid complexity and confusion,” Kovar said. “Utilize tools such as online banking apps and personal finance management software to monitor accounts and track transactions across different institutions. Set up automatic transfers and bill payments to streamline financial management and ensure timely payments.”
Additionally, you’ll want to spend time determining what you need from multiple banks, and whether you’ll use the perks.
“Evaluate your banking needs, preferences and long-term goals to determine whether diversification across multiple banks is the right approach for you,” Kovar said.
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This article originally appeared on GOBankingRates.com: Is It Bad To Bank With Multiple Banks?
