Is It Better to Have Separate Banks for Savings & Checking Accounts?

by Stephanie Dube Dwilson
Talk to each bank's customer service department about fees and overdraft penalties.

Deciding whether you want your savings and checking accounts at the same bank or different banks isn't a cut-and-dried decision to make. Keeping your accounts together can bring greater simplicity, but keeping them separate can increase your financial security. Choosing which option is right for you boils down to how much money you're working with and your personal preference.

One Bank Increases Simplicity

If the idea of managing your money seems overwhelming and you want to keep things as simple as possible, then you'll likely prefer to keep your savings and checking accounts at the same bank. According to an MSN Money article published in 2013, people who keep accounts at separate banks are likely to spend more money, partially because it's easy to lose track of just how much you have when you're dealing with multiple accounts. In addition, keeping your accounts at the same bank can make it easier to save money. Setting up automatic transfers from your checking to your savings account is a simpler process when you're just dealing with one log-in.

Separate Banks Grant Greater Security

If you're worried about how secure your money is, especially in the face of possible fraud or identity theft, then you might want to keep your checking and savings accounts at different banks. The Federal Deposit Insurance Corp. insures up to $250,000 per bank account. So although most young adults likely won't run into issues with having too much money in their accounts, you might have issues with temporarily losing access to your accounts if your identity is stolen. These issues can typically be resolved quickly, but having an emergency savings account at a separate bank can insure that you don't run into unexpected problems.

Chasing a Higher Interest Rate

Keeping your savings and checking accounts at separate banks allows you to seek the best deals for each type of account. Just because one bank offers a high interest rate on its savings accounts doesn't mean it offers good deals on its checking accounts. And sometimes, banks managed solely online offer the best savings accounts rates because they don't have as many overhead costs to cover. But the downside of chasing a higher interest rate could be that you have to deal with more banking fees. Some banks offer discounts if you keep your savings and checking accounts at the same place.

Avoiding Overdraft Fees

Overdraft fees can be a big issue, especially for young adults who are just starting out and people who can lose track of how much money they have in their checking accounts. If you choose to keep your savings and checking accounts at the same bank, you can protect yourself from high fees if you accidentally write a check for more than you have in your account. Most banks allow you to set up automatic transfers from your savings account in the event of an overdraft.

About the Author

With features published by media such as Business Week and Fox News, Stephanie Dube Dwilson is an accomplished writer with a law degree and a master's in science and technology journalism. She has written for law firms, public relations and marketing agencies, science and technology websites, and business magazines.

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