Bank Account Consolidation

[felizcortez]

I'm trying to simplify my financial picture a bit and was looking at the following.

I have 3 separate banks that I work with.

Chase - Have a checking and a savings account
HSBC - Have a savings account.
Credit Union Through work. Have a checking and a savings account. 

I'm less than thrilled with the HSBC account as they used to pay a competitive interest rate compared to other banks, but not so much any more.  This one has just been a deposit a few hundred a month in and save up some cash.  Will likely close this account in the next week.

Chase - I started these accounts so I'd have access to local ATM's - there is a branch right down the street which makes it convenient, but I have no major ties.  I cash almost every check I receive through the smart phone app so I hardly ever visit the branch.  They don't pay a competitive interest rate at all.

Credit Union - I've had this accounts for 14 years through work.  I've had an auto loan through them back in the day and they are generally helpful, but the rates aren't any good and the ATM's are all out of state - this one has been a legacy account, but most of my paycheck gets deposited here.

I've been debating on switching to Ally Bank or something similar (Capital 360) completely to accomplish a few goals. 

1.  Simplify my finances and reduce the total number of accounts.  Prevent future headaches.
2.  Earn a slightly higher interest rate on the cash I have on hand.
3.  Reduce ATM fees when traveling - Ally seems to reimburse for these nationwide.

A few questions.
1.  Will closing these accounts hurt my credit score.
2.  Any pitfalls you see to the approach other than going completely online. 
3.  Any advice you'd have or recommended banks.

Thanks.

[velocistar237]

1.  Will closing these accounts hurt my credit score.

Unlikely, though a new bank might do a credit check that could ding your score a tiny bit. A bank account isn't a credit account, so an account closure shouldn't affect your score unless you close a credit line along with it.

2.  Any pitfalls you see to the approach other than going completely online. 

Besides the ATMs, I know that Capital One 360 limits the number of transfers between accounts per month. For example, if I want to send money via a friend's Capital One 360 account, or if I want to transfer money from one sub-account to another. This shouldn't affect checks or anything, so it's really not a big deal.

It might be good to keep your credit union account since it's so old.

3.  Any advice you'd have or recommended banks.

Capital One 360 is decent. It used to be ING, and it hasn't changed significantly since.


I don't usually care about my bank's rates. I use a zero-interest checking account and move excess money into Vanguard at a regular basis.

[pagoconcheques]

I don't usually care about my bank's rates. I use a zero-interest checking account and move excess money into Vanguard at a regular basis.

This.  To me a bank account exists only for handling transactions.  Money moves through it for the purposes of receiving income, paying bills, and shifting the rest to long-term investments. 

[Chris @ Saturday Financial]

A few questions.
1.  Will closing these accounts hurt my credit score.
2.  Any pitfalls you see to the approach other than going completely online. 
3.  Any advice you'd have or recommended banks.

1. As mentioned above, closing a bank account shouldn't affect your credit score. Even if you have a line of credit that you are closing, the closed line of credit will stay on your credit report even after it is closed. (You can monitor your credit for free at creditkarma.com if you want to see how any specific actions affect your score.) I wouldn't hesitate to close your account with the credit union unless they provide some specific advantage that you wouldn't have at another bank. That brings me to my next point.


2. Simplifying is always a good thing, as long as you don't simplify so much that you've given up certain advantages you could have by maintaining a relationship with two or more banks. I think it's a good idea to keep an account at one local bank. When you buy a car (and pay "cash") or purchase real estate, you will likely need a cashier's check. While those certainly aren't yearly events, it definitely helps to have a brick an mortar branch in those situations.

3. If I were you, I would likely keep the Chase account for local ATMs and for situations when you need a brick and mortar. Then I would research online banks and find the one that fits best. If Ally has nationwide ATM refunds, that sounds like a good bet. Interest rates are always subject to change at any financial institution, but from what I've seen Ally is consistently near the top. (I also agree with pagoconcheques. Unless you keep a 3-6 month emergency fund in a cash account, you shouldn't be too worried about interest rates in your savings account. If you do keep a fund like that, then by all means take advantage of the ~1% return you can get at an online bank.)

[slugline]

I think it's a good idea to keep an account at one local bank. When you buy a car (and pay "cash") or purchase real estate, you will likely need a cashier's check. While those certainly aren't yearly events, it definitely helps to have a brick an mortar branch in those situations.

I was a house-buying newbie and didn't know the above until a couple days before closing. I had my entire down payment in an online-only bank, and my personal check would not have been acceptable. I was very thankful for my past self for maintaining an account at a local bank that allowed me to stop in, do a debit card advance from my online-only bank account and generate that cashier's check mere hours before I needed it.

[Livewell]

I don't usually care about my bank's rates. I use a zero-interest checking account and move excess money into Vanguard at a regular basis.

This.  To me a bank account exists only for handling transactions.  Money moves through it for the purposes of receiving income, paying bills, and shifting the rest to long-term investments.

Exactly how we look at it too!

[Mr Dorothy Dollar]

LMCU - has 3% interest rate for up to 15K of deposits with doing some activities each month. They offer some sort of ATM reimbursement too. With a good rewards credit card and LMCU, I can do all my banking. They take mail deposits.