Having more than one local bank account

[Figuring It Out]

Hi,

I have a question that if I asked of any friend (except one), I would be considered paranoid, but I would like to ask it here and see if the response is the same or different.

I belong to a five-star rated credit union and all of our living-expense money and emergency savings is with them. It's close to my house and convenient, but this nagging feeling tells me I should have a second account at a different bank as well, because if something happened at my credit union where I couldn't get to my money in an emergency, I could access money via my other bank. I guess my specific fear is some national crisis in which withdrawals are limited to $x. I would want to get as much out as possible. Right now, for instance, I have a 24-hour limit cash withdrawal on my ATM of $300. With a second back account, that would be $600 daily limit.

Is this worth doing? I've really simplified my accounts over the years and I hate to add a layer unnecessarily, but it feels prudent. Is it, or am I being paranoid? I do keep a bit of cash at home as well in case of emergency.

P.S. I had an interesting experience a couple weeks ago in that I pulled into my credit union to make some deposits and get some cash, and the whole parking lot was cordoned off because the CU had just been robbed. No one could do any branch banking. My banking that day wasn't necessary, so it was only an inconvenience, and I could have gone to another branch, but the feeling of not being able to access my money in the way I normally did reignited this issue for me.

[Greg]

Hi,

I have a question that if I asked of any friend (except one), I would be considered paranoid, but I would like to ask it here and see if the response is the same or different.

I belong to a five-star rated credit union and all of our living-expense money and emergency savings is with them. It's close to my house and convenient, but this nagging feeling tells me I should have a second account at a different bank as well, because if something happened at my credit union where I couldn't get to my money in an emergency, I could access money via my other bank. I guess my specific fear is some national crisis in which withdrawals are limited to $x. I would want to get as much out as possible. Right now, for instance, I have a 24-hour limit cash withdrawal on my ATM of $300. With a second back account, that would be $600 daily limit.

Is this worth doing? I've really simplified my accounts over the years and I hate to add a layer unnecessarily, but it feels prudent. Is it, or am I being paranoid? I do keep a bit of cash at home as well in case of emergency.

P.S. I had an interesting experience a couple weeks ago in that I pulled into my credit union to make some deposits and get some cash, and the whole parking lot was cordoned off because the CU had just been robbed. No one could do any branch banking. My banking that day wasn't necessary, so it was only an inconvenience, and I could have gone to another branch, but the feeling of not being able to access my money in the way I normally did reignited this issue for me.

I'd certainly agree that outside of the Gyroscopic Investing bubble, people might think there is a bit of paranoia but no one ever said that was a bad thing

Coming back to the original post, I'd think that having money in different banks would be a wise decision. Many of us on here have various brokerage accounts or different sponsors (Blackrock/Ishares, etc.) and want to eliminate as much counterparty risk as possible.

While true it does make it more difficult when you have many accounts, this is a necessary consequence of diversifying your assets into many pots.

Putting all of your eggs in one basket leads to them easily being eaten by a fox. Spreading them all around makes that a much more difficult process (provided you do not have a SHTF/Easter Egg Hunt scenario).

In the end you have to determine your own risk/security comfort level. I have stuff split between many different banks and brokerage accounts and just use Mint.com for tracking everything. It's not too bad and gives me a bit more comfort that I have access to money in a lot of places if something goes horribly wrong in one of them.

[BearBones]

Agree with 1NV35T0R. I think of this in terms of the sleep/work ratio (SWR). If something allows you to sleep better/longer and requires little work, then it has high value.

Setting up a second banking act is relatively easy to do and manage, and it provides the benefits you outlined. I also like having two acts for which my TresuryDirect and Vanguard acts can transfer $ locally.

Having a safe deposit box with gold in it in a stable foreign country might provide more sleep too, but the high degree of work/hassle to set something like this up and manage drives the SWR down to an impractical number for most people.

[Ad Orientem]

Hi,

I have a question that if I asked of any friend (except one), I would be considered paranoid, but I would like to ask it here and see if the response is the same or different.

Just because you're paranoid doesn't mean that they aren't out to get you. Beyond which I substantively agree with the two preceding comments. I will just briefly add that if you hold your gold physically I would use a separate bank for that from where you keep your emergency cash fund. And if you are fortunate enough to have a significant amount of gold, having more than one safe deposit box at different banks is not a bad idea for added security. I really don't think there is anything odd about having more than one bank account. My mother does and she doesn't use the PP.

[Greg]

As a sidenote, it might be worth looking at the website below or others to determine if you can make any extra cash by splitting up the money you have in your bank account now. It's always nice getting "free" money and would add to the security vs. hassle ratio stated above.

http://www.maximizingmoney.com/bank-bon ... romotions/

[jackely]

Unfortunately you live on planet earth in Universe X (why haven't they given a name to Universe X yet) and it seems to be the nature of this existence that there really is no scenario you can conceive of that will make you completely safe from all possibilities. Trust me, I've tried, but it really is impossible and eventually it becomes a waste of precious energy. You will eventually realize this as you navigate your way through the universe and learn how to best focus your energies.

The universe does work at destroying us all eventually, and this is scientific fact, so maybe a paranoid person is just overly sensitive to reality.

Signed: Deepak Choprah (Not really but since I'm getting ready to retire and have no clue what to do with the rest of my life, I'm thinking maybe I could make a killing with profound insights like this and then I wouldn't have to worry about anything).

[Ad Orientem]

Unfortunately you live on planet earth in Universe X (why haven't they given a name to Universe X yet) and it seems to be the nature of this existence that there really is no scenario you can conceive of that will make you completely safe from all possibilities. Trust me, I've tried, but it really is impossible and eventually it becomes a waste of precious energy. You will eventually realize this as you navigate your way through the universe and learn how to best focus your energies.

The universe does work at destroying us all eventually, and this is scientific fact, so maybe a paranoid person is just overly sensitive to reality.

Signed: Deepak Choprah (Not really but since I'm getting ready to retire and have no clue what to do with the rest of my life, 'm thinking maybe I could make a killing with profound insights like this and then I wouldn't have to worry about anything).

That's a really good comment. I use the PP because I am deeply conservative in my approach to money and investments. But I am also incredibly lazy, and the PP is a perfect fit for both aspects of my nature. That may be one reason why I tend not to get real excited when people start throwing in modifiers to the PP that are going to take me over the one hour of time per annum that I have earmarked for taking care of my investments.  To get me to spend more than that one hour you will need to come up with a very compelling argument.

Hence I use ETF's for almost everything except the gold where I keep a good chunk physical. No, I don't buy my own bonds via Treasury Direct. TLT and EDV are safe enough for me and it's incredibly time saving. No, I don't buy I bonds or savings bonds. I use SCHO. It's safe enough for me and a lot easier. No, I don't obsess over ways to shave a basis point or two off my expenses or taxes by tax harvesting or some other gimmickry. I'd rather spend the time reading a good book.

If you do any of those things because it helps you sleep at night, then more power to you. I sleep quite well where I am though. One of the big selling points of the PP is its simplicity. So by all means do what you need to in order to get that good night's sleep. But don't get neurotic. And if you are spending significantly more than an hour a year on your investments, ask yourself why and if it's worth it?

[jackely]

That's a really good comment.

Think about how rapidly the simple truths I spoke of are passed from parent to offspring in the animal kingdom. That is truly amazing.

[craigr]

You need to weigh convenience vs. safety. While it may be easy for you to manage your money with a lot of accounts, it could be quite hard for a significant other or relatives in case you are incapacitated.

Personally I'd feel fine with one bank and accessible assets at a brokerage. Most brokerages allow easy check writing and even debit cards against a cash sweep account. That may be perfectly fine for your secondary access needs and you won't have to open up accounts at a lot of places.

With the above said, you should always make sure you are below FDIC/NCUA insurance limits at any bank you use. If you aren't then you need more than one account if you want to continue using banks.

[Figuring It Out]

Thanks for the thoughts, everyone! In light of the fact that it wouldn't be too inconvenient and there is a locally-owned five-star rated bank close to my house, I think I'll go ahead and open another account. Nice idea on the idea of dual safety deposit boxes as well.

[moda0306]

For poor guys like me, and with low interest rates, as my second bank I use the Bank of Safeinmybasement.

[Greg]

For poor guys like me, and with low interest rates, as my second bank I use the Bank of Safeinmybasement.

Does the bank teller at the Bank of Safeinmybasement wear a foil hat at all? hah If not you should institute that policy.

[gizmo_rat]

For poor guys like me, and with low interest rates, as my second bank I use the Bank of Safeinmybasement.

One of the big banks in the UK has had a "technical glitch" thats stopped some customers accessing their accounts for nearly a week.
Consequently I've recently opened a second account with Royal bank of UnderTheMattress. Interest rate is appalling but 100% uptime guaranteed.   

[smurff]

If you have only one bank account, that one bank has a lot of say over whether or not you have access to any of your own money.  You've placed your entire financial life in that one bank's hands.  If one is fully employed, fully paid up on taxes and debts, has a name that can't be confused with anyone else's, has well-behaved relatives, and is living in normal times, then I guess one bank account would be okay. 

Unfortunately we are not living in normal times (but we do live in interesting times--there's a Chinese proverb I can't remember all the words to).  One sociopathic bank CEO and his underlings--and I went to grad school with a lot of them--can engage in enough mayhem and MF-Global -style reckless behavior to lock up your assets, despite (alleged) FDIC/SPIC insurance, for weeks if not months. 

So a good plan B is a second bank, preferably one that focuses on community banking, and a good plan C is Third National Bank of At Home.

[Greg]

For poor guys like me, and with low interest rates, as my second bank I use the Bank of Safeinmybasement.

One of the big banks in the UK has had a "technical glitch" thats stopped some customers accessing their accounts for nearly a week.
Consequently I've recently opened a second account with Royal bank of UnderTheMattress. Interest rate is appalling but 100% uptime guaranteed.