Investors and financial advisers talk about the benefits of a diversified portfolio, but do the same rules apply to the money you keep in bank accounts? Should you keep all of your accounts with one bank, or divide your deposits among accounts held at different institutions? Since money held in deposit accounts is FDIC insured, it's not as much a concern over the risk of losing the money when held in a single bank over whether or not you're getting the best interest rates on each of the accounts you need to maintain.
If you have one or two interest earning checking accounts and a long term savings account held with the same bank for the convenience factor – but only the checking accounts are receiving a competitive interest rate, you may be missing out on interest from your long term savings. It's definitely convenient to connect your bank accounts to transfer money as necessary from one account to the other, but is it worth a 2 to 4% difference in interest rate earnings? Examine the interest rate your accounts are earning and then compare it to similar deposit accounts found at other banks. If you can earn more money by having one of your accounts in another bank, it may be well worth your while to use two banks.
Weighing the conveniences of having a single bank over the additional interest earnings you might obtain by opening an account at a second bank is important and shouldn't be overlooked, though. In addition to transferring money from one account to another with ease when all accounts are held with the same financial institution, you also have a consolidated view of your finances through one bank. You can often print a single statement to see all accounts on one page, where as if you have accounts in two or more banks, you've got to have five separate log ins to each of their online account management systems, or compare five physical bank statements in order to get the complete picture of your financial situation.
Another consideration is how much money you have. If you've got more money in your bank accounts than can be FDIC insured (amounts vary depending on the type of account and the bank the money is held in), you would do better to divide your money among accounts held at different financial institutions to ensure your entire finances are insured.