Dear Dr. Don,
I received an inheritance, CDs included. As they come due, I am finding the best rates via Bankrate.com and opening new accounts. There may be up to four CDs maturing per month
I recently read about ChexSystems and am wondering if opening many CDs (in the) short term with different banks will cause ChexSystems to alert banks and “blackball” me even though I’m using these as investment vehicles. I’m trying to do a good thing with my inheritance. Please help.
— Marla Millstone
You really don’t need to worry about how all this investment activity affects your ChexSystems consumer banking report. While your ChexSystems report can reflect all these account relationships, banks aren’t going to turn away your business based on that information. Banks are more interested in incidents of insufficient funds and mishandled accounts. It’s this type of banking history that causes them to turn away your business.
The bigger concern is how all this banking activity affects your credit report and credit score. Your credit score is based on the information on your credit report. Some banks do what’s known as a “hard pull” when you fill out an account application, even though you’re not applying for credit. These inquiries stay on your credit report for two years but will affect your credit score only for one year.
You can ask the bank whether it will pull your credit report before investing in a CD with that institution. Avoiding banks that pull your credit report before they let you invest your money will keep your credit reports clean of these hard pulls. Reviewing your credit reports regularly will make sure that the banks keep their end of the bargain.