Complex Numbers

Don't Bank On It

Today in You're Doing It Wrong: Banking.

    Why You Need a Backup Bank  
Your bank can close your accounts, refuse to deposit checks, or do anything else at any time. You need a Plan B.

Well, if that's the case, why use a bank at all? Oh, yeah, because if you keep cash around, eventually the cops will find out and seize it all through civil forfeiture.

I know some people will be like "Bank? I don't hang on to money long enough to need a bank!" This article, then, is not aimed at you.

Banks can refuse to let you open an account in the first place, refuse to accept a check for deposit at their discretion, and can close out your accounts and send you—and your money—packing any time they want, for a wide variety of reasons.

I suppose that's still better than sending you packing while keeping the money.

It’s a nightmarish scenario: You have a checking account with Bank A, where your paychecks are directly deposited and from which you pay all of your bills. One morning you wake up to a long list of bounced checks, failed debits, and late fees—and a note from Bank A that your account has been closed due to “suspicious activity,” or some other vague reason.

One wonders just how probable this is. I've heard of it happening, but it's never happened to me or anyone around me that I know of. The article says it happens "all the time," but as you've probably figured out, there are other examples of hyperbole in the text. One of the links there directs to a news story that mentions, specifically, Bank of America.

Thing is, if you're still banking with one of those huge national banks... why? The purpose of their existence is to screw you.

A backup bank account can also act as quasi-emergency fund. A checking account at Bank B likely won’t be earning much interest, but it will also likely sit undisturbed, and since it’s not directly connected to your daily spending, you won’t be regularly tempted to dip into it.

Also, I can't help but feel like the article is making a lot of assumptions: that you have a job, that you have spare money, etc. I think that to many people, the idea of having enough cash to bother with one bank, let alone two, is laughable. I suppose one can make the argument that to read the article, you have to be in a position to at least have internet access, which implies you're in a place where that's possible. Still, when I was poor, it might as well have been "How to Save Money on Yacht Maintenance."

Don't get me wrong; I'm a big fan of having backup plans. It's like carrying a spare tire in your car. But that assumes you're in a position to own a car in the first place.