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  • Writer's pictureTrisha Isaac

Should You Have Business and Personal Accounts at the Same Bank?

Opening a business bank account is one of the first steps toward starting your own business. But, does it make sense to open a business account at the same institution as your personal account?

 

In terms of banking, individuals and businesses have different needs. With a business bank account, you are likely handling large volumes of cash, writing more checks, and may need bookkeeping help from the bank.

 

On the other hand, you are probably using ATMs and have a lower volume of transactions in your personal bank account.

 

To serve differing needs, banks offer checking accounts specially designed for businesses.


Pros of Having Business and Personal Accounts at the Same Bank


It’s easier to manage and transfer money.


Having your business and personal accounts at the same bank makes it easier to manage your finances. You can take care of your business banking needs when you go to the bank for your personal banking needs, making it quick and easy.

 

Additionally, transfers between your business and personal bank accounts at the same institution will be much faster than transferring between two banks.


You might get relationship discounts.


Banks often offer discounts to customers who have multiple accounts with them. You may get the fees on certain accounts waived, lower interest rates, or receive better service overall. With all your money in one bank, you will get more out of your relationship with that bank.


It's easier to get credit.


If you want to get a loan in the future, having multiple accounts at your bank can help. With more than one account, your bank will know you better than other lenders, so it will have more reference points than just your credit score when you apply for a loan.

 

If your bank knows that you can successfully manage personal and business bank accounts, it proves that you know how to manage money. Obviously, this will help your odds when you apply for a loan.


Cons of Having Business and Personal Accounts at the Same Bank


You may not get the best deal.


Many banks target different types of customers. While some banks have great personal bank accounts, they may have very mediocre business bank accounts. If you look for banks specializing in business customers, you will likely find a much better deal than your current bank offers.


You won't be maximizing your FDIC insurance.


The importance of FDIC insurance cannot be understated. FDIC insurance will cover the first $250,000 you have in a bank account.

 

You should know that if your personal and business account balances combine to exceed $250,000, your entire balance (of the two accounts) won’t be insured. However, if you open your business checking account at a different bank, you get an additional $250,000 in protection from that bank. This will allow you to have more insured money than using one bank for both accounts.

 

Another layer of approvals


When you borrow personally at the same bank as your business banking, it can add another layer to the approval process. You may need to go through the process of “commercial concurrence” to make sure there is no unfair competition through confusion by having both types of account at the same bank.

 

Should Each of my Accounts be at the Same Bank?


There are advantages and disadvantages to having your business and personal bank accounts at the same lender. The convenience of managing all your accounts at one bank and the potential for relationship discounts may make it worthwhile. However, you might not get the best deal for your business account, and having accounts at different banks can provide additional FDIC insurance coverage.

 

Although using the same bank for your personal and business account has some benefits, having each account at different lenders is probably better. This helps to avoid confusion and ensures accurate financial record-keeping. Additionally, some banks offer specific products and services tailored to business accounts that are unavailable for personal accounts, such as business credit cards and merchant services.

 

However, the decision ultimately depends on your personal preferences and needs. It's best to consult a professional who can help guide you in making this decision. Contact me today to determine which option is right for you.


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