Better Banking Through Multiple Banks
Spread your risks through Multiple Banks for Better Banking.
Better Banking Rule of Thumb # 2.
Afterall, you are taking a risk with your money, if you deposit it in a bank. In essence, you are investing in that bank. The misconception is that when you put money in a bank, you are leaving it there for safe keeping. That’s a load of baloney.
Be very clear here: You are an investor with a whole bunch of rules stacked largely against you – meaning, you have to abide by all the rules and regulations imposed upon you and then also the new ones that will invariably not be in your favour.
Remember, you are being an entrepreneur when you are recreating your own banking system to build your wealth. You make use of the system. It is there for your use. Do not be dictated to by the bankers themselves. Once you put money into their bank, they control it to their benefits.
Once you understand this, you can see why it is the wisest course of action to have at least 2 bank accounts that are kept active.
How can you do this and not lose your sanity from over administration?
Here’re my simple ways of dealing with multiple bank accounts.
1) In Bank #1, have a savings and checking account with one bank. This will be your active account with an ATM card and a credit card too. Yes, you can also have some managed investments like Guaranteed Investment Certificates or Bonds too. Make sure there’s no fancy investment here.
2) In Bank #2, also have a savings account and a checking account but here, you can have more fancy investments here like your Retirement Savings and Investments, Mutual Funds, etc. This is not your main activity account, but keep up some activity to keep it current. You can have another credit card and ATM card as a standy by.
3) If you are in business, set up a seperate account here. Make sure you do have a simple savings account for easy and cheaper cash transfers. You’ll get your business credit and ATM card here too. You might even want to have an interest paying account here for surplus or standby cash.
Now here are some extremely important points:
a) All these accounts must be in different banks.
b) These banks must not be co-owned by one another.
c) These banks must not be branches of each other.
The reason for this precaution in simple – banks can and will have the power to transfer one deficit account to another, if they are of the same bank – especially if it’s in the same branch.
Imagine this nightmarish banking scenario – you are in default to the bank on a line of credit for a pile of money in your business account, so they take your personal investment account to balance the deficit business account. This can happen visa versa, even if the business is considered a seperate entity. It’s because your name happens to be on that business account. Sucks huh? Scary too.
Here are other reasons to have more than 2 bank accounts.
1) If and when (it’s invariable) you find one being a real pain to deal with, just move your account service around to another bank.
2) You can’t be held hostage for your own funds – at least you have something to fall back on. Whatever happens to one, you have another.
You can read a little more about the wisdom of having multiple accounts.
But for me, the main reason is from right at the beginning – you are in control of your own money – therefore, you are being your own bank.
Tags: Better Banking, Diversification, Multiple Banks
Posted in Better Banking, Diversification, Multiple Banks, Personal Bank | 1 Comment »
