What are the Benefits of Banking at Multiple Places?
In the realm of personal finance, diversification is a common strategy, and one of the ways to do that is by having multiple bank accounts at different banks or credit unions. That’s right—it is okay to bank with the institution your family has always gone to, while also opening a checking account or getting a loan at a different institution. Read more about the benefits of banking at multiple places in the article below.
Key Benefits
Having accounts at multiple financial institutions can offer many benefits, which can significantly enhance your financial management and security.
- Convenience and Accessibility
Having accounts at different institutions can also make it easier to manage your money and access banking services. Here are a few ways how:
- You can take advantage of different unique features and services. Maybe a credit union has a checking account that comes with benefits made for students, such as our Elevated Checking account, while a bank has a savings account that has a high interest rate.
- You can use different accounts for different purposes. For instance, you can have one account for fixed expenses UVU tuition and apartment rent, another for variable expenses like groceries and entertainment, and a third for savings. This can make budgeting easier and help you keep track of where your money is going.
- You can access a wider network of ATMs and branches, because different banks and credit unions have different ATM networks. This can be particularly useful when traveling or if you move frequently, as it can help you avoid out-of-network ATM fees.
- Diversification of Financial Risk
Just as investors diversify their investment portfolios to spread risk, the same principle applies to banking. By spreading your money across different banks and credit unions, you can mitigate the risk associated with any single bank’s failure or service disruption.
- Access to Better Interest Rates and Savings
Different financial institutions offer different interest rates on their savings accounts. By having accounts at multiple banks/credit unions, you can take advantage of the best rates available which can help you maximize your savings and earn more from your money. Check out UCCUs rates!
Credit Unions vs. Banks
When considering diversifying your accounts, it’s important to understand the difference between banks and credit unions. While both offer similar services, there are key differences that can impact your financial management.
For example, credit unions are member-owned, not-for-profit organizations. This means they often offer lower fees and better interest rates than traditional banks. They also tend to have a more community-focused approach, which can lead to better customer service. Read more about credit unions here.
However, if you prefer a wider range of services, as well as possibly more access to branches and ATMs, a traditional bank might be more suitable.
Managing Your Accounts
Managing multiple accounts can seem daunting. However, with the right approach and online tools, it can actually be a smooth and easy process.
Most banks and credit unions offer online banking services, like the UCCU Mobile App allowing you to access your accounts anytime, anywhere. You can transfer funds between your different accounts as well as see the balances of each place you bank with.
Mobile banking apps also provide a convenient way to monitor and manage your accounts on the go. This makes it much easier to track your spending and adjust your budget. It also gives you more flexibility in times of need because you have different options.
Potential Downsides and How to Mitigate Them
While having accounts at different financial institutions offer numerous benefits, they also come with potential downsides. Here are a couple examples:
- Increased complexity. It can be hard to keep up with all your accounts if you aren’t financially ready for it. Ensure you are ready by successfully budgeting, paying bills on time, and tracking your spending.
- Potential fees and penalties. With more accounts comes more potential fees and penalties if not managed well. Set reminders for bill payments and make sure you understand the terms and conditions of the account.
Is Banking at Multiple Different Financial Institutions Right for You?
The benefits of banking in multiple places help your decision to open accounts depends on your financial goals and management skills.
If you value diversification, better interest rates, and access to a variety of banking services, this strategy could be beneficial. However, it’s crucial to weigh these benefits against the potential complexity and the need for diligent management. With careful planning and the right tools, this can be a smart move towards achieving your financial objectives.