Trying to wrap my mind around having three separate banks.

[godwilling]

Hello all!

I've seen a lot of talk about having three separate banks (one commercial bank, one CU, one online bank) and using them. Could someone explain how they all work together?

I understand having a commercial bank that has atms/branches where you can withdraw money, and online banks usually serve as HYSA, but where does CU fit into it? If I'm saving money, shouldn't it all go into the HYSA?

I have a commercial bank and a CU, but was exploring options for a HYSA and I've been spinning myself into the ground ever since trying to figure this out.

Thanks!

 

[abaez]

@godwilling Seems complicated. Only use the banks you want to use, no need to have a Credit Union if you don't use it or want it.

 

[samwiri]

@abaez I’d imagine this is to have options to shop rates/services. But I’d agree, find a financial institution you really like and makes the most sense for where you live. There are plenty of large credit unions that are more competitive with less fees than corporate banks and also have online banking. Some are even online based, like PenFed.

I would only add multiple banks into your situation if you find a really good promo, like a HYSA/HYCD or a better rate when you need a loan.

 

[theredraven]

@godwilling Diversify baby!

I have 2 banks where I maintain checking/savings accounts. Why? Banks mess up. Once had accounts frozen due to a banking error. Their mistake. Vowed to never trust just one bank again.

I also have a HYSA online.

 

[ellennb]

@godwilling I live in a major city so it might be different for more rural locations but I don't really see the need for a commercial bank. Our CU is part of a network where we can use atms across the country fee free. Honestly the only downside we have experienced is that our CU doesn't participate with Zelle so we encounter restrictions with Zelle having signed up with our debit card.

 

[nakeman]

@ellennb We have a CU that everything goes in and out of and an online bank for hysa… I’ve never encountered a reason to need a commercial bank. I barely use cash and that’s the only reason I could think of. Even then you can still pull from an atm anywhere in the world, so it’d only be if you were trying to make big purchases in cash or something.

 

[nothingtoknow]

@godwilling Credit Unions typically give better rates on stuff. Credit cards, loans, etc. Having a relationship with them can be helpful; my CU gave me a loan when I wasn't qualified because I needed a car and my dad had banked there for years. This was mid-2000s as well; I'd failed the credit check but they had a process where it could be reviewed by a team.

However, the CU isn't national. A commercial bank is more likely to have branches to get you handled if you're not near home and need to get access to more than you can withdraw from an ATM or a CU sister branch. I now live 2.5 hours from my CU and the sister branch for them is 30 mins away and limits withdrawals to $1200; if I wanna buy something for more, I literally would have to make multiple-day trips to the sister branch to get enough money, or ask them to make an exception.

Online bank is perfect for a HYSA. If you need money from it, it takes a few days which works great as a built-in cool-down period. It also lets you get typically better rates than the commercial bank provides.

I use my commercial bank for monthly, same-amount-a-month payments. I use my CU, 2.5 hours from me, for my day-to-day stuff - utility payments, CC payments, small amounts of cash (I can withdraw from an ATM 5 minutes away, but not that bank's branch). I use the HYSA to save excess money.

 

[godwilling]

@nothingtoknow You got my mind back on track with your last paragraph. I already do use my commercial bank for same-amount-a-month payments. I should keep SOME money in my CU account and replenish it each month just for daily stuff, and then take the money I have in my CU savings account and move it to a HYSA.

So it sounds like my goal is to keep enough + buffer in the commercial account, put 100-150 in CU, and then whatever I want to save into HYSA.

 

[heavenward7]

@godwilling I have a credit union account because they gave me a great rate when we purchased our car a few years ago. Under 2% all i had to do was be a member. They are not my main back and i really only move money in n out once or twice a year from there. My main bank is one on the list of the most known. I use that to have my direct deposit and bills paid out of. anything extra will be moved over two of the two other online banks I have.

 

[jedidiahanointing]

@godwilling I don't know why a typical person would need that many banks. I can understand a checking account and a high yield savings account. You don't typically need much beyond that.

I have something like 10 accounts but each has a purpose. I have a BofA that I run businesses through so I have 4 business checking accounts to keep those separate. Then I have a jt account with them for our personal expenses.

I have a Credit Union, which I have to keep a checking and savings there, which I have with them because I also have 2 large lines of credit.

And I have a couple High yield savings accounts for business and personal.

 

[kjv5738]

@godwilling My wife and I have our joint in a commercial bank because easy branch access. I’m a member of a credit union and have various lines of credit with them. For me my local credit union has lower rates on lines of credit than the big banks. Last I have an American Express HYSA because I’m heavily into the American Express network and I was given a higher rate. I also have plenty of faith in them and can quickly send money to the joint or my credit union

 

[mb74]

@godwilling I have 2 banks, each with a checking and savings account. My main bank I've had forever and there's a branch within walking distance if I need it. All my bills are auto paid from this account. To maintain its "free" status, I have to auto deposit at least $25 into savings once a month, so I do

My second bank is an online bank with a HYSA where my emergency fund goes. I also have a checking account with debit card in case I do need to quickly access those funds. I also have my venmo/PayPal/etc attached to this checking account so any payments go there and I can sweep them into savings easily AND if anyone ever hacked my venmo they wouldn't get anything.

 

[ladywalsh]

@godwilling you don't need any set number

you use what you need to maximize what you get

CU is for local credit options, HYSA is to try to only lose a little bit to inflation, commercial idk that's the one i don't find a use for. i guess, i churn their offers for extra cash

 

[polcat]

@godwilling One reason why you want different accounts at different institutions is because of the federal government insurance. The insurance covers $250K.

 

[popdave4011]

@godwilling Right now, I have 3 accounts with 2 banks:

Ally Checking: feeless ATM withdrawals anywhere CONUS (possibly the world?). I usually only keep $250 - $500 of spending cash in here. This is also the only card I keep on me.

Ally HYSA (1): Currently $4K in here. Trying to save up to $17K to have 1 year of mortgage. payments as an emergency fund.

Fairwinds Credit Union checking account: This is my main operating account. It gets money in from employment Direct Deposits from my work (net lof 401k and HYSA contributions), and then money out in budgeted/automated transfers to my Roth IRA, brokerage trading account, and HYSA (1). I also budget in most of my non-Amex bills. My Amex bills will vary wildly because my expenses can vary wildly: sometimes I'm just taking care of myself, sometimes I have 3-5 relatives living with me and I'm supporting them, and a lot of the time, I am too trigger happy on the Amex swiping. So, this is my half-assed way of budgeting: I check my Amex and cash account multiple times a week. When the Amex begins to creep up past my cash account, I know its time to pull back on the spending nosedive.

I always manage to pay my Amex in full before interest is charged, and so it seems to work lol.

 

[lukeh]

@godwilling I have never understood the need for HYSA accounts. Laddering T-Bills has always made more than I get offered in HYSA.

I guess there is something to be said for the savings accounts money being liquid all the time. Am I missing something else?

 

[redwhd]

@godwilling HYSA are great because it let's you earn money off your cash savings. My Chase savings account earns like $.01 per month, but my emergency fund at Capital One earns over $100. You can shop around for the best interest rate, but if it's stressing you out just pick one. The difference between 4.3%, 4.5% and 4.7% is negligible compared to the difference between 4.3% and 0.01%

I also have a checking account through Capital One in case I ever need to access my emergency fund immediately. I don't personally use a credit union because I move a lot and those are typically location specific

 

[beauty1993]

@godwilling I use three separate institutions because I wanted at least two so I had a backup in case I get locked out of my primary, while also having access to both high yield interest and a local branch. To get high yield interest, I had to settle for online only and thus I opened a third checking account at a bank that offers free checking but earns no interest.

 

[salimpu]

@godwilling I used an online bank for years because of the high interest rate on savings. That was for long-term savings. I actually never set foot in the place ever until I happened across one while out of my home country on vacation.

Commercial bank is great for recieving pay checks and paying bills with online bill pay, etc. Good for short and mid term savings. Lots of features and financial options.

Credit union is great to keep a few grand in a checking account. This is great for cashing personal checks and making deposits of cash etc locally then transfer to other accounts.

 

[heisking]

@godwilling I have USAA for primary checking and savings, PNC for HYSA, and a credit union leftover from a former job. Oh, and Schwab for overseas emergency cash without fees.

Plus three different 401k accounts and an IRA.

Squirrels have to hide the acorns!

If it’s not in my primary checking, “it’s not there” and I don’t spend it or think about having it.

Oh and Goldman HYSA thru Apple.

A few (3-4 times a year) I check All The Balances to get a good viewpoint.

The CU is generally for favorable loan rates - usually a used car but it’s been like 20 years since I’ve done that.

And payroll professional that I am, I abhor online banks. If you knew how those things worked, you’d never use them.