Is It Too Risky to Keep All of Your Money at the Same Bank?

Protecting your money is certainly an important thing.

The money in your bank account is money you probably worked hard to earn or save. And so it's natural that you'd want to protect it.

Now, you might think that your best bet is to spread your money across different checking or savings accounts. That way, if one bank gets hacked or goes down, you won't lose all of your money.

Generally speaking, keeping your money in the same bank might make your life easier. But you may want to maintain a second account for peace of mind.

You're protected in case your bank fails

It's pretty rare these days for a major banking institution to fail without any warning signs. But as long as you keep your money in an FDIC-insured bank, that won't be something to worry about.

With an FDIC-insured bank, your deposit of up to $250,000 is guaranteed, even if your bank goes under. And while well-known banks are generally FDIC-insured, if you want to make sure that's the case for your bank, you can use this tool to look it up.

You should also know that if you have a joint bank account with a spouse/partner or relative, that $250,000 limit is per person. So in that case, you'd be protected for up to $500,000 in deposits. And let's face it -- most people don't have anywhere close to that amount of money tucked away in the bank.

What about a breach or fraud?

At least 79 U.S. financial services companies reported data breaches in 2022, according to American Banker. In some cases, that could mean having a criminal gain enough information to steal money from your account.

But in that case, you're protected, too. If funds leave your bank account in an unauthorized manner (such as them being stolen), and you notify your bank within 60 days, your bank must investigate within 10 days. And if it takes longer than that to resolve the issue, your bank must issue a temporary credit to your account (minus a maximum of $50) while it keeps working on the problem at hand.

A good reason to maintain a separate bank account

While you certainly could keep all of your money at the same bank, it may not be a bad idea to maintain a separate account with a small amount of cash. The reason? You never know when an accidental freeze might be put on your account, and it could take time to get the issue resolved. So in that case, having a second account would mean you're not barred from accessing your personal funds completely.

Let's say someone with a similar name or bank account number to you has their bank account frozen due to a court judgment. If your account gets locked out by accident, it might take a few days to clear things up. So that way, you'd at least have a different checking or savings account to access for near-term money.

It's easy to see why you might feel the need to have more than one bank. For the most part, you should feel pretty secure keeping all of your money in one bank that's FDIC-insured, and that could make it easier to track. But it's also easy to make the case that maintaining a second backup account isn't a bad idea.