Are there any drawbacks to having multiple bank accounts at different institutions?

Question

I currently have a money market savings account and a checking account online with Citibank. I also have a checking account at a local bank in my city.

I'm considering opening another money market account, and possibly also another checking account, online with Bank of America. I would transfer some of my Citibank balances, but still keep the Citibank accounts open.

There are at least two reasons I want to do this. First, it would give me more options and greater flexibility when traveling overseas. Second, the money market interest rate at Bank of America is currently significantly higher than what I'm earning at Citibank.

So, assuming that I fulfill each bank's requirements to avoid fees, is there any reason not to open more bank accounts?

Thanks!

Answer 1

no reason at all. Actually, it makes sense from a sound financial planning standpoint--if you are "diversified" and have money in several different banks, it reduces your risk, in that if one institution faces a crisis (such as wachovia is today) and there are fears raised (and a possible panic on that institution), you will still be able to function financially.

Answer 2

No there is no drawbacks to having mutiple bank accounts....some may say you're crazy LOL but I don't think so ---I personally have 2 checkings, 1 savings, 1 line of credit, & 1 personal loan all at Citibank....then I have a checking for me and a savings for my daughter at ING Direct....I also have a checking at Wachovia, and one at Washington Mutual....I haven't experienced any drawback....my primary accounts is at Citibank......Out of the 5 checking accounts I only really use 3....the WAMU and Wachovia have more locations so when I know I'm not going to be around a CItibank I transfer money from Citi to one of the other banks...... so it's kinda like you going overseas

One thing you might consider is balancing them....if you're going to be using all of them equally performing transactions just remember what came from what bank!!!