Using one financial institution: good, bad, or indifferent?

Using one financial institution: good, bad, or indifferent?

09/05/2022
Using one financial institution: good, bad, or indifferent?
Blake Anderson Blake Anderson

There probably isn’t a day that goes by that I don’t encounter mention of this or that online high yield savings account. Then it got me thinking about how my own finances are set up. It appears Jonathan used to use a couple of different banks for different reasons, but has moved to consolidate at WaMu.

I started to wonder what the advantages and disadvantages are of consolidating your financial dealings with one or just a few providers. Our finances are exclusively through USAA. If you’ve never heard of USAA, they’re a ‘military-affiliated’ financial services company. I’m not a representative of the company, so I’m not positive what all the membership requirements are, but generally you can use them if you or your parents are/were in the military. What I do know is that USAA kicks ass. They provide banking, insurance, and mutual funds and brokerage. I could do a whole post on them, but that’s not the point.

We do all of our financial services through USAA. I wonder, though, if this is the correct strategy. I’ve come up with a short list of advantages and disadvantages:

Advantages

  1. I only have to check one place each day to get updates on our bank balances, and, if I wish, investment account balances.
  2. Transfers and bill payments are faster. More importantly, if there’s a problem it’s much easier to fix. If both accounts or bills are with the same institution, you don’t have two places pointing fingers at each other.
  3. There can be discounts and bonuses for doing it all at one place. The commonly cited example is insurance. You should try to get both homeowners (or renters) and auto insurance from the same place. Typically there’s a discount for doing so. Also, minimum balances are sometimes met by using balances across all accounts.

Disadvantages

  1. If you bank online and your password is compromised, it could be more devastating since all your accounts use that one password.
  2. You might miss out on the best rates.
  3. If customer service sucks at one arm of the company, it likely sucks everywhere. (This is most definitely not the case with USAA - their customer service rules.)

Anyone have any other advantages or disadvantages to add to the list? What am I missing?


  • VIA
  • Blake Anderson



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