Checking, savings, business, CD, money market, cash reserve, investment — with so many accounts available to U.S. consumers, should you keep them with a single financial institution? Let’s review the pros and cons of keeping all your accounts in one place.
Pros of keeping all your accounts in one place
Here are some reasons why it makes sense to consolidate your accounts.
1. FDIC covers up to $250,000 for each eligible account
The Federal Deposit Insurance Corporation (FDIC) provides coverage of up to $250,000 per eligible account at the same insured financial institution. Covered accounts include checking and savings accounts, money market deposit accounts (MMDAs), and certificates of deposit (CDs).
So, as long as each one of your qualifying accounts has a balance under $250,000, it’s OK to keep those accounts together at the same financial institution. For example, if you were to have $100,000 each in a CD, checking account, and savings account at the same FDIC-covered bank, you would still be insured. Even though the accounts together equal $300,000, each account has less than $250,000, and the coverage would still apply.
To find out if your deposits are insured by the FDIC, use the FDIC’s Electronic Deposit Insurance Estimator (EDIE).
When you add accounts to your portfolio with the same bank, just remember that the FDIC warns consumers that non-deposit investment products, such as mutual funds, annuities, life insurance policies, and stocks and bonds are not insured by the FDIC.
Are you a credit union member?
Federally chartered credit unions and those with headquarters in Arkansas, Delaware, South Dakota, Wyoming, or the District of Columbia are insured by up to $250,000 by the National Credit Union Administration (NCUA).
State-chartered credit unions may be covered by a state-sponsored or private insurance, so contact your credit union representative for more details about potential insurance of deposits.
2. Quicker coverage of bounced checks
Having more than one account at the same bank may help you to quickly cover a check or automatic debit or credit transaction with insufficient funds.
Some banks may give you a quick heads up early in the morning that an incoming transaction won’t clear due to a low balance, giving you time to make a quick deposit. In the event that you have a savings and checking account with the same financial institution, you could quickly cover the cash crunch by transferring funds from the savings to the checking account over the phone or online. (See also: