Too much business with one bank?

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MtnTravel
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Too much business with one bank?

Post by MtnTravel »

We are pretty heavily invested in one bank. Two businesses, personal accounts, personal mortgages, and commercial loan for investment property that has a building/land as collateral, but also required a personal guarantee.

'm starting to get a little concerned about doing too much at one bank. They've treated us well, are easy to work with, but is this something to be concerned about?
yules
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Re: Too much business with one bank?

Post by yules »

MtnTravel wrote: Sat Jun 03, 2023 6:20 pm We are pretty heavily invested in one bank. Two businesses, personal accounts, personal mortgages, and commercial loan for investment property that has a building/land as collateral, but also required a personal guarantee.

'm starting to get a little concerned about doing too much at one bank. They've treated us well, are easy to work with, but is this something to be concerned about?
For me, if there is a problem with the bank and I can’t access my money, I’m screwed. I’m not worried really about being made whole or cyber crime. I’m just concerned about what happens if the ATMs aren’t working or something like that. So in your situation, I might have a goodly amount of cash accessible at another bank just in case.

Yules
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Stinky
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Re: Too much business with one bank?

Post by Stinky »

It seems to me that two banks bidding for your business will get you a better result than having just one bank that doesn’t need to stretch to get your business.
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afan
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Re: Too much business with one bank?

Post by afan »

With all your personal and business banking at one place, you should be getting no fees, preferential rates on loans and deposits along with white glove service. That could add up to serious dollars. Before looking at being a regular customer at two banks, see what you could get as a private banking client where you are and at competitors
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exodusNH
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Re: Too much business with one bank?

Post by exodusNH »

MtnTravel wrote: Sat Jun 03, 2023 6:20 pm We are pretty heavily invested in one bank. Two businesses, personal accounts, personal mortgages, and commercial loan for investment property that has a building/land as collateral, but also required a personal guarantee.

'm starting to get a little concerned about doing too much at one bank. They've treated us well, are easy to work with, but is this something to be concerned about?
Are you under the respective FDIC limits? If so, there is nothing to worry about with your cash.

Do you have loans with ridiculously low rates that aren't set in stone? Maybe worry a little bit, since if the bank fails and gets taken over, the new bank doesn't have to continue your non-contractual rates.
JBTX
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Re: Too much business with one bank?

Post by JBTX »

I would see the parameters as follows:

- making sure you stay within FDIC limits
- making sure that you aren’t so dependent on any one account, that if it gets frozen, for whatever reason, that you experience a liquidity crunch. This happens. Ask me how I know.
- making sure you aren’t so dependent on a revolving credit line such that you are in a pinch if they decide to wind it down, at any moment. My wife’s company’s bank decided to pull their line of credit during the financial crisis, resulting in them resorting to receivables factoring for a stint.
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MtnTravel
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Re: Too much business with one bank?

Post by MtnTravel »

Thanks for all of the replies. We are “private bank” customers at this bank. We keep everything under FDIC limits. My only concern is if there were a dispute over a mortgage payment or something on the commercial loan, I don’t want them to get into my personal accounts while we wait to get things sorted out.
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Jimbo Moneybags
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Re: Too much business with one bank?

Post by Jimbo Moneybags »

MtnTravel wrote: Sat Jun 03, 2023 7:54 pmMy only concern is if there were a dispute over a mortgage payment or something on the commercial loan, I don’t want them to get into my personal accounts while we wait to get things sorted out.
Just don't give them auto-draft or ACH authority for payments on the loans. In fact, it is a poor financial practice to give any entity authority to initiate an ACH transfer from ("pull") your bank account(s). Using a credit card or "pushing" a payment via online billpay is much safer for the consumer.
Fubs
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Re: Too much business with one bank?

Post by Fubs »

Banks have the right to offset from your other financial accounts you have with them. As such I keep my primary personal account at a separate bank than my business account. To lay out a real world scenario, say you received a large check from a client and it "initially clears." You spend the money in the account to buy material, pay bills, etc. Then weeks later the money is pulled due to a dispute on the client's side. Now your business checking account is in the negative and your bank decides to pull money you set aside for a mortgage, rent or car payment from your personal account and now you're left scrambling to find funds elsewhere to cover the hole.

Another reason to not put all your eggs in one basket is simply due to being locked out of your primary bank such as a network outage, account got hacked, etc. As such I always recommend people have at least two checking/savings at different institutions with at least one month of living expenses at the other bank. The same should apply with credit cards because those could potentially be frozen if they share the same logins.
lstone19
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Re: Too much business with one bank?

Post by lstone19 »

yules wrote: Sat Jun 03, 2023 7:07 pm For me, if there is a problem with the bank and I can’t access my money, I’m screwed. I’m not worried really about being made whole or cyber crime. I’m just concerned about what happens if the ATMs aren’t working or something like that. So in your situation, I might have a goodly amount of cash accessible at another bank just in case.
This. We are at the point of our lives where our primary source of cash is out retirement funds. That had all been with Fidelity but six months ago, I moved some to Merrill Lynch (also to take advantage of a new money promotion and qualify us for BofA Preferred Rewards) with the idea that we wouldn't be touching that money for a long time, it was backup in case something happened at Fidelity (could be them or it could be us inadvertently locking ourselves out of our accounts). If something were to happen, having funds elsewhere turns a major problem into an inconvenience.
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Jimbo Moneybags
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Re: Too much business with one bank?

Post by Jimbo Moneybags »

Fubs wrote: Sun Jun 04, 2023 2:03 pm Banks have the right to offset from your other financial accounts you have with them.
That is a contractual right that only applies if the right to offset is a part of the the applicable account agreement(s).
lazyday
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Re: Too much business with one bank?

Post by lazyday »

Jimbo Moneybags wrote: Sun Jun 04, 2023 12:03 pmJust don't give them auto-draft or ACH authority for payments on the loans. In fact, it is a poor financial practice to give any entity authority to initiate an ACH transfer from ("pull") your bank account(s). Using a credit card or "pushing" a payment via online billpay is much safer for the consumer.
Letting insurance and credit card companies automatically pull funds from my bank sure is convenient.

Has anyone heard of cases where this caused problems?

Credit card companies mail me paper statements which I quickly look over, usually before they pull funds. If there were something to dispute, I might shut off the auto payment.
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8foot7
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Re: Too much business with one bank?

Post by 8foot7 »

Jimbo Moneybags wrote: Sun Jun 04, 2023 3:59 pm
Fubs wrote: Sun Jun 04, 2023 2:03 pm Banks have the right to offset from your other financial accounts you have with them.
That is a contractual right that only applies if the right to offset is a part of the the applicable account agreement(s).
That is certainly true, but I'd be willing to bet the right of offset is in almost all consumer account agreements. In addition, possession is 9/10ths of the law, especially when it comes to banks. They'll seize first and ask questions/defend later.
UpperNwGuy
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Re: Too much business with one bank?

Post by UpperNwGuy »

For more than 50 years I've made a practice of having two banks for my personal accounts. When I had a business I used a third bank.
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Re: Too much business with one bank?

Post by UpperNwGuy »

Jimbo Moneybags wrote: Sun Jun 04, 2023 3:59 pm
Fubs wrote: Sun Jun 04, 2023 2:03 pm Banks have the right to offset from your other financial accounts you have with them.
That is a contractual right that only applies if the right to offset is a part of the the applicable account agreement(s).
And most new account agreements now include that provision.
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MtnTravel
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Re: Too much business with one bank?

Post by MtnTravel »

UpperNwGuy wrote: Mon Jun 05, 2023 6:10 am
Jimbo Moneybags wrote: Sun Jun 04, 2023 3:59 pm
Fubs wrote: Sun Jun 04, 2023 2:03 pm Banks have the right to offset from your other financial accounts you have with them.
That is a contractual right that only applies if the right to offset is a part of the the applicable account agreement(s).
And most new account agreements now include that provision.
Yeah I just looked and every one of my accounts at two banks has that provision.
000
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Re: Too much business with one bank?

Post by 000 »

Yes between right of offset and a security issue simultaneously affecting all accounts, it is not an unreasonable concern, especially given commercial stuff.
FunnelCakeBob
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Re: Too much business with one bank?

Post by FunnelCakeBob »

MtnTravel wrote: Mon Jun 05, 2023 7:29 pm
UpperNwGuy wrote: Mon Jun 05, 2023 6:10 am
Jimbo Moneybags wrote: Sun Jun 04, 2023 3:59 pm
Fubs wrote: Sun Jun 04, 2023 2:03 pm Banks have the right to offset from your other financial accounts you have with them.
That is a contractual right that only applies if the right to offset is a part of the the applicable account agreement(s).
And most new account agreements now include that provision.
Yeah I just looked and every one of my accounts at two banks has that provision.
Offset is a standard part of commercial loan contracts but more limited on the consumer side, though not impossible. You can reduce your risk exposure here by moving most of your deposit to another institution. However, it's not clear whether this concern is merely theoretical or something truly keeping you up at night.

You have to ask yourself whether you're getting what you want from this "private bank" arrangement where your banking relationship is concentrated with one bank. On the flip side, if you spread out your banking relationship, you may not have the same leverage to negotiate.
lazyday
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Re: Too much business with one bank?

Post by lazyday »

Jimbo Moneybags wrote: Sun Jun 04, 2023 12:03 pmit is a poor financial practice to give any entity authority to initiate an ACH transfer from ("pull") your bank account(s). Using a credit card or "pushing" a payment via online billpay is much safer for the consumer.
Is this something you've read, or know from working in the industry?

I let insurance and credit card companies ACH directly from my bank. If this is foolish of me, please let me know why. I don't want to bother with manually paying every month unless there's good reason to.
exodusNH
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Re: Too much business with one bank?

Post by exodusNH »

lazyday wrote: Mon Jun 05, 2023 5:55 am
Jimbo Moneybags wrote: Sun Jun 04, 2023 12:03 pmJust don't give them auto-draft or ACH authority for payments on the loans. In fact, it is a poor financial practice to give any entity authority to initiate an ACH transfer from ("pull") your bank account(s). Using a credit card or "pushing" a payment via online billpay is much safer for the consumer.
Letting insurance and credit card companies automatically pull funds from my bank sure is convenient.

Has anyone heard of cases where this caused problems?

Credit card companies mail me paper statements which I quickly look over, usually before they pull funds. If there were something to dispute, I might shut off the auto payment.
I have never had issues. I'm not sure why people panic about it. I prefer it as it means if the payment is late, it's on them to resolve.

The only time it bit me was when my mortgage got sold. On a prior sale, the ACH payment transferred over. But for whatever reason, on a subsequent sale, it didn't. I wasn't good at keeping track of my accounts and went a year without paying my mortgage. I learned about it when the foreclosure auction paperwork showed up... That's when I looked and saw $24,000 too much in my account.

Other than that, I'm happy to have companies pull the money, at least for the ones that have a fee for credit card payments.
000
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Re: Too much business with one bank?

Post by 000 »

exodusNH wrote: Tue Jun 06, 2023 7:25 pm The only time it bit me was when my mortgage got sold. On a prior sale, the ACH payment transferred over. But for whatever reason, on a subsequent sale, it didn't. I wasn't good at keeping track of my accounts and went a year without paying my mortgage. I learned about it when the foreclosure auction paperwork showed up... That's when I looked and saw $24,000 too much in my account.
Out of curiosity, did you have to pay interest / fees for that or did they accept blame?
radiowave
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Re: Too much business with one bank?

Post by radiowave »

If you are using electronic bill pay at your original bank, consider a second bank/brokerage and set up a parallel bill pay just in case the first is not working, locked out, hacked, etc.
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exodusNH
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Re: Too much business with one bank?

Post by exodusNH »

000 wrote: Tue Jun 06, 2023 7:57 pm
exodusNH wrote: Tue Jun 06, 2023 7:25 pm The only time it bit me was when my mortgage got sold. On a prior sale, the ACH payment transferred over. But for whatever reason, on a subsequent sale, it didn't. I wasn't good at keeping track of my accounts and went a year without paying my mortgage. I learned about it when the foreclosure auction paperwork showed up... That's when I looked and saw $24,000 too much in my account.
Out of curiosity, did you have to pay interest / fees for that or did they accept blame?
I don't recall the specifics. It was my fault for not paying attention. I literally caught it 24 hours before the auction was scheduled. The mortgage company was remarkably helpful getting it resolved.

It's my understanding that typically bill pay won't transfer over. I think I got "lucky" because the original mortgage holder was shutdown during the GFC and the mortgage transferred to Cenlar. I never had to do anything.

When Cenlar sold it off a couple of years later, I didn't think twice about it because it all worked out fine the prior time.

On the upside, because I had $24,000 of excess cash at my bank, I was as a tier that had the wire fee waived!

It also woke me up to the fact that I was paying 6.something% when mortgage rates had dropped into the 4s. I refied shortly after. Twice actually and now have a 2.625% rate, with about $120k remaining.
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