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A few months ago I discussed a problem my wife and I had with opening too many checking accounts. If you are in the same situation as us … today I would like to share how to simplify your checking accounts … just like we recently did.
For the past 2 to 3 years, we had four personal checking accounts that we were trying to manage. This might not seem like a big deal, but too many open checking accounts posed several issues.
First of all … it just cluttered up our personal finances.
It was confusing which account was being used to pay bills from or write a check out of.
One time we got $70 in overdraft fee’s because we didn’t have the funds in an account we were paying from. Fortunately, the bank was willing to waive half of those fee’s … but we still were out $35.
Having to pay the overdraft fee was frustrating, but the biggest problem it caused were the monthly maintenance fee’s imposed by the two local banks we had accounts open with.
Every time I got paid at my job … I would have to go in and change my direct deposit information to be sent to the other local bank.
This manual step (that I did 24 times per year) of changing my direct deposit information allowed us to keep waiving the monthly maintenance fee’s. But it became a big nuisance in my life. And we were lucky that I didn’t forget to change it twice a month … or we would have started to get charged monthly maintenance fee’s.
So after over a year of constantly moving money back and forth between accounts … we decided to start cleaning up these accounts.
Our Personal Checking Accounts
I won’t bore you with all the details again (that we shared in our last post), but we had 4 open checking accounts.
Trying to avoid the monthly maintenance fee’s at the local brick and mortar banks and the inactivity of our online banks started to become an issue.
Here is a quick recap of our past personal checking accounts –
- Local Bank #1 – requires minimum daily balance of $1,500 or monthly direct deposits of $500 or more to waive $7 monthly fee
- Online Bank #1 – no monthly maintenance fee
- Online Bank #2 – no monthly maintenance fee
- Local Bank #2 – requires minimum daily balance of $1,500 or monthly direct deposits of $250 or more to waive $12 monthly fee
Why did we have four open checking accounts at one point?
The online banks were opened up over the years to get a few small sign-up bonuses. The good thing about those are no monthly maintenance fee’s. On the other hand … having 2 of them just clutters up our financial life a bit.
The first local bank checking account was opened up when we first moved to our area over 10 years ago. No sign-up bonuses were earned and the account requires certain balances or direct deposits each month.
The second local bank checking account was opened up for a bonus of $200. At the time this seemed like a great idea … earning an extra $200 for simply opening a new account. But we soon realized it was way more of a hassle than what it was worth.
Steps to Simplify Your Checking Accounts
The first step we made was to take inventory of our open checking accounts. We compared the benefits of each account by making a list of features and fee’s.
Since there were not a ton of features in these checking accounts, most of the decision making was around the fee’s charged.
We decided to keep one of our brick and mortar checking accounts and one of our online checking accounts. The other two accounts were to be closed.
Which Online Checking Account Should We Close?
The decision to close one of our online checking accounts was simple. One of the online checking accounts hadn’t been used in over a year and carried a balance of $6.
The other online checking account wasn’t much more active, but we still had checks that we could write. We didn’t have any checks left for the other online account … so that is the one we closed.
Note – I really don’t want to pay to order new checks … which we write very few during the year. So we kept the account we had unwritten checks from. Both accounts paid very little interest, so that wasn’t a consideration.
In order to close the one online checking account, we had to make a 5 minute call to walk through the process. Pretty simple really and we had the $6 balance sent out to us in a check.
I was surprised at how good it felt to get this account closed.
And now that the we closed one of our online checking accounts, it was time to make the harder decision – which local brick and mortar checking account to close?
Which Brick and Mortar Account Should We Close?
The decision to close one of the brick and mortar checking accounts was a bit more difficult. But we knew we couldn’t keep both open for our own sanity.
Both of these accounts carried monthly maintenance fee’s … one was $7 the other was $12.
Each of the accounts would waive the maintenance fee if we carried an average monthly balance of $1,500. This isn’t really appealing to our situation … since we don’t like to use a checking account as a place for savings.
Both of the accounts also have the option of waiving the maintenance fee for qualifying monthly direct deposits. One of the accounts required $250 and the other $500.
At this time … neither amount is that significant to our situation. As long as we consolidate to only one account … the minimum direct deposit amount is insignificant.
So we moved on to looking at other benefits of the accounts.
One of the checking accounts was through the same bank as our mortgage lender and where our van is currently financed. This seemed like a logical account to keep since we could have all of these accounts through the same login. Remember … we are looking for simple.
But in the end … we chose to keep our original brick and mortar checking account. Our oldest son had recently opened up a teen checking account with our original local bank. So we ended up keeping that checking account open in order to help him with his checking account.
It really didn’t matter all that much about which of these accounts to close and keep. The important thing was to close one of the accounts to avoid our direct deposit requirements and simplify our finances.
Note – Before closing our brick and mortar checking account, we made sure to move all of our monthly automated payments. Once we changed them all … we gave it a trial month before closing out the account to make sure everything was working properly.
Why Do We Still Have Two Checking Accounts?
So you may be wondering … why did we stop at only closing two checking accounts? Why didn’t we just keep one checking account instead of two?
We thought about this for a couple of months to be honest.
Eventually, I think it makes since to consolidate even further into keeping just our online checking account and closing our brick and mortar account. However, we have seen the need still for going into a physical bank. I’m sure this will eventually change … but for now we would like a physical location to go in when needed.
Of course, keeping the brick and mortar account would still rely on us being able to waive that monthly maintenance fee.
We could potentially close our online checking account. But we write our checks from that account … and don’t want to order anymore. Plus this account pays a bit of interest and doesn’t have any monthly maintenance fee’s.
So for the time being … we will keep two checking accounts … but will continue monitoring if it makes sense long term.
In the meantime, we will enjoy not having to manually change our direct deposit information every month and constantly monitoring our account balances.
Do you have too many checking or savings accounts opened? What about investment accounts? Has this caused you to pay extra fee’s for monthly maintenance or insufficient funds?
