If you have checking and savings accounts at several different banks or credit unions, you have your reasons. But there are many reasons why it may be time to combine those deposit accounts so you can take advantage of the benefits that your financial institution wants to give you.
Dawn Reshen-Doty, president of Benay Enterprises Inc., a financial services company in Danbury, Connecticut, says it’s easier for her clients to plan their finances if their money is centralized. “Combining checking and savings at one place makes it simpler for you to have a clear and more complete view of your financial picture,” she says.
If you make a mistake and overspend with your checking account, having a linked savings account can trigger an automatic deposit into your checking. That can help avoid pricey overdraft fees, Reshen-Doty says.
“You can use your savings as a well of reserves, usually for free,” she says.
Overdraft fees are not to be disregarded, as they continue to rise. According to Bankrate’s 2015 Checking Survey, the average overdraft fee, known in the banking industry as a nonsufficient funds fee, rose to a high of $33.07, a 1% increase from the previous year. The year-over-year increase was less than the rate of inflation. Banks also have lines of credit that can be used as overdraft protection, but you would have to qualify for a line based on your credit history, Reshen-Doty says. Linking your savings account to checking could make applying for credit unnecessary.
Having multiple accounts in one place can help consumers establish good financial habits, Reshen-Doty says. By easily allowing regular automatic transfers from your checking account into savings, you can build an emergency fund with little effort, she says.
“You can use the transfers to make a savings goal and track your progress,” she says.
Reshen-Doty says banks also have programs that automatically transfer a few cents to a dollar from every debit card transaction into a savings account at the same institution. This is a type of forced savings that would be difficult to do if savings and checking accounts were in different places, she says.
People can set up automatic transfers between accounts at different banks, but the hassle of managing multiple online logins may make it harder to set up.
“Another good reason for combining your accounts is relationship-pricing on other products,” says Gregory Meyer, branch manager at Provident Credit Union in Palo Alto, California. The more money you have with one company, the fewer fees you may need to pay for cashier’s checks, safe-deposit boxes and other bank services.
These are often tiered benefits that may not kick in until a customer has at least a few thousand dollars in total deposits, says Terri Browning, senior vice president and retail regional director at Sterling Bank in Portland, Oregon. It’s much easier to reach those tiers when you have more money in one place, as regular deposits rack up greater totals.
By creating a more complete relationship with one bank, you may get to know a branch manager or personal banker more closely, and he or she may be more likely to want to sit down with you and consult with you on your financial picture, Browning says.
It’s easier for a banker to offer more personalized service if he has a consolidated view of your accounts, she says.
“All banks have much the same set of products and services, but what really sets one banker apart from another banker is the ability to sit down with a customer and help them come up with a plan for the rest of their life,” Browning says.
The more savings and checking accounts you have at one bank, the more likely you are to be a profitable customer, Meyer says. While this benefits the bank, customers can use it to their advantage when negotiating certain perks such as favorable loan rates, he says.
“Many branch managers are judged on their office’s profitability, and losing a big customer could be the difference between showing profit for a branch and not,” he says.
For example, if you’re a big customer and you’re refinancing your mortgage, the bank manager could probably beat any competitor’s quote just to keep you, Meyer says.
Even if you’re not the bank’s biggest customer, Reshen-Doty says having consolidated accounts gives the institution access to a history of your financial transactions.
“Sometimes you can get preferred rates from that banking institution because they’ve been able to see your good spending habits,” she says.
Many banks are able to offer combined statements each month that reflect the different accounts held at the institution, and this can save a lot of time and paper, Meyer says.
It’s not just account holders who benefit, but eventually, their heirs will find it helpful, Meyer says. “When you die, if all your accounts are in one place, you have made things much easier for the executors of your estate. They won’t need to go to multiple financial institutions to settle the estate. This saves your family time and effort,” he says.
No matter what your stage is in life, personal financial management means knowing how much money you have and where it’s going, Reshen-Doty says. Combining your savings and checking accounts at one bank helps you do just that, she says.