A few months ago I wrote about my need to simplify my finances by closing old bank accounts. I got off to a decent start, closing four obviously unnecessary accounts, but never went past that. Why? My theory is that those were the only ones that were obviously unnecessary, while the others I could make some case for. In many cases though multiple accounts would serve the same purpose, eliminating the need to keep all of them open.
This lends itself to the question, “What are my needs?” What do I really need out of my bank accounts? I have identified the following as needs from my bank accounts:
- High interest rate on excess cash held for emergencies.
- Above average interest rate on cash held in checking account for paying regular expenses.
- Ability to write paper checks occasionally.
- Ability to make occasional deposits of checks and cash.
- Fee-free ATM access.
- Ability to make small fee-free transfers to external accounts to simulate direct deposits.
- Opportunities to refer new customers for referral bonuses.
Our household currently has 12 open bank accounts, and it looks like our needs can be met by just six or seven of those. The winners (if you want to call them that) are:
- FNBO Direct Online Savings - Meets need #1. Not a fancy website by any means, but at 3.85% APY it still has a great interest rate for an FDIC-insured account.
- Presidential Interest Plus Checking - Meets needs #2 and #3. The account has an above average 2.75% APY and unlimited check writing. The rate won’t set the world on fire, but I don’t plan to leave that much in the account anyway.
- Bank of America My Access Checking - Meets needs #4 and #5. There are several branches and ATMs in my area (one in the lobby of my office).
- Peoples Trust FCU Savings - Meets need #6. This account doesn’t limit the number of external accounts you can link and only limits the dollar amounts you can transfer out. This is great for transferring $25 or $50 to simulate a direct deposit when needed to avoid monthly service charges or fulfill the terms of a promotional bonus offer.
- ING Direct Orange Savings (2 – one for both my wife and I) - Meets need #7. Each account can earn up to $500 in referral bonuses ($250 each for the Orange Savings and Electric Orange Checking products). This is the source of the ING Bonus Referral Links I have posted on this blog and are the way I cover hosting costs.
Who are the losers in this exercise? Here is the list of accounts to be closed:
- Chase Free Checking – Very similar to my Bank of America Checking account, but BofA just has more convenient locations.
- Chase Business Checking – Opened for the promotional bonus but I have no real need for the account.
- Chase Business Savings – Same as Chase Business Checking: no need for the account.
- HSBC Online Savings – Oh HSBC, how far you’ve fallen! You were once the leader, but unfortunately not anymore. That combined with the crappy customer service I got when trying to close by HSBC checking account makes me think it is time to end this relationship. It’s not you, it’s me. No wait – actually it is you. Sorry!
- Peoples Trust FCU Premier Checking – I opened the account when I worked for Shell and this was still Shell Employees FCU. Then the account was great because the branch was directly below my building. Now I work somewhere else so the few locations PTFCU has aren’t convenient. And since my basic checking needs are met by my BofA account, there is no reason to keep this account open.
On the bubble…
- Presidential Premier Savings - This account was once the perfect companion to my Presidential Interest Plus Checking, but now the interest rate is below that of FNBO Direct and the limit of $35,000 on deposits earning the stated rate kind of cramps my style. I may keep it open since I can do instant transfers between it and the Presidential Checking account and it does earn a higher rate than the checking account, but most of my reserve cash will be at FNBO. I’m still undecided.
