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Suggestion - Keep savings account separate

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Established Contributor

Suggestion - Keep savings account separate

Many banks' debit cards allow you to select "savings" at ATMs for cash withdrawals, and it'll work just the same; I've confirmed this with a number of banks over the years.  This is concerning because if your debit card is ever compromised and you have a savings account with the institution, your savings account/balance could be at risk too.

 

Since noticing this, my savings and checking accounts are at separate banks.  Just thought I'd share the suggestion.

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Established Contributor

Re: Suggestion - Keep savings account separate

The savings account is usually only accessible via ATM (with PIN), not for purchases (used for credit purchases).  So, the savings balance is safer regardless.  Having them at the same bank makes it simpler and faster to transfer funds in an emergency.

 

But whatever works for you is great.  For both convenience and security, you could have checking and savings accounts at the same bank, accessible via debit card, and then another savings account elsewhere, for longer term savings.

 

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Senior Contributor

Re: Suggestion - Keep savings account separate

Or just never carry a debit/ATM card on you like I do. I never use debit, and on the rare occaisions when I need a cash infusion my Discover card gets me $60 cash "over" per day at grocery stores & Walmart and my Walmart store card gets me $100 cash over per day at Wallyworld. Pay both/either in full by the due date and no interest charge on the cash. I'm not good at storing numbers in my head so not a fan of ATMs.


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Valued Contributor

Re: Suggestion - Keep savings account separate


@DaveInAZ wrote:

Or just never carry a debit/ATM card on you like I do. I never use debit, and on the rare occaisions when I need a cash infusion my Discover card gets me $60 cash "over" per day at grocery stores & Walmart and my Walmart store card gets me $100 cash over per day at Wallyworld. Pay both/either in full by the due date and no interest charge on the cash. I'm not good at storing numbers in my head so not a fan of ATMs.


Dave, I happen to do the same thing.  I do actually carry my debit card around, but it is very rare that I use the ATM with it.  I am in a habit of knowing ahead of time when I may need cash, and simply get it at the point of purchase with my Discover card.  

                               

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Frequent Contributor

Re: Suggestion - Keep savings account separate

Thanks for the post OP

 

My personal security method is to not use my debit card. I only carry it for post office money order purchases, otherwise I never use it, no atm's ever. I get paid in cash more than other forms, so i'm swimming in it before the bank drop. As for all other purchases, I use either of my 2% cards or whatever offer i'm chasing. 

 

I personally keep my savings and checkings at the same bank for the ease of transfers as mentioned above. I have also recently considered another savings account with better interest rates to hold a larger longterm amount. This account will be for the scenario mentioned by the OP.  However, I think one needs the ability to fund his or her checkings account on demand. Its my opinion that there should be at least enough for 1 months bills in the savings account linked to your checkings

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Re: Suggestion - Keep savings account separate


@Blodreina wrote:

Many banks' debit cards allow you to select "savings" at ATMs for cash withdrawals, and it'll work just the same; I've confirmed this with a number of banks over the years.  This is concerning because if your debit card is ever compromised and you have a savings account with the institution, your savings account/balance could be at risk too.

 

Since noticing this, my savings and checking accounts are at separate banks.  Just thought I'd share the suggestion.


The banks I use will let you link (or un-link) accounts to your debit card; the only account that is required is the primary checking account.

 

I have my savings 'linked' because I like to have the option to make deposits directly into savings using the ATM, but if there was a security concern I would simply have the bank remove ATM access for the savings account.  Easy peasy.

 

I like having them at the same bank for several reasons, a few of which have already been mentioned (instant transfers between accounts, etc.).  Some people might like to have them linked for overdraft protection as well.

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New Contributor

Re: Suggestion - Keep savings account separate

It is true that a debit card requires a pin code, but that is only a layer of protection not a guarantee. Pin scammers are connected to ATM devices, stollen with the card by trusted family members etc...

However, another member mentioned the solution of not carrying a debit card, which can protect you from ATM pin scammers, and potentially pin/card theft if you never set up the pin. Another option is simply to request not to have the debit card or destroy it when you receive it. That is if you are worried about that sort of thing.

Still, I would like to mention for consideration a few more reasons to keep your savings and checking separate. After all, when we think in terms of fiscal security or investments in any other branch of finances, we usually think of terms like diversification. So here are a couple reasons I think diversity in holdings is a good thing.

Insurance. Everyone has heard their monies are FDIC insured up to $250k. FDIC insurance is standard on banks and credit unions for simple savings and checking accounts, CD's etc... So what do we have to worry about right? While it is true that a depositor has not lost a single cent (of FDIC insured funds) since the foundation of FDIC, that doesn't mean it's always been quick and painless. FDIC is relatively quick to act after the bank officially closes it's doors, but certain requirements must be met before then, such as attempting to sell off any and all accounts to a solvent institution. And for some accounts (trust etc...) The payout time can be even longer. Who wants to go without access to all of their money for even a week?

FDIC Misconceptions. This one really only applies to big holders, but there are a lot of misconceptions about how to increase FDIC insurance amounts, why take the risk, accounts in different institutions are always insured separately from one another.

Better Products. Not many people would argue against the fact that certain institutions are better at certain things than others. So when you use multiple institutions your not just diversifying the security of your holdings but also the products available to you.

Relationships. So long as you tailor your financial institutions to meet your financial needs and your financial operating capacity than you are not just diversifying the level of security and number of products but potentially the number of relationships. Admittedly, too much diversification can have the opposite affect, if you are barely moving money or have no face time with even one of the institutions, but if that's the case you are doing it wrong (see financial needs and operating capacity).
Finally,
Access. This isn't so much a reason to diversify so much as it is a reason to no longer, not diversify. With the advent of Zelle and Venmo (so going as you are comfortable, confident, and competent in there use) have really cut down the wait time and difficulty of moving currency from one institution to another. Some might think this cuts down on the relationship with the bank by removing the face to face time, and that's OK, some degree of face time with already one of your institutions is imo important. Moving money however is something that I would argue also builds relationships (especially with the large feel institutions). After All, a kind face and a sad sob story won't generally get you far with these guys because all niceties aside, the, they are more in love with your money if we are being honest.



























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Established Contributor

Re: Suggestion - Keep savings account separate

Here is a simple reason I keep mine separate. Few days ago I called Wells Fargo. My phone wasn’t working so I couldn’t verify via text message my identity. The customer service person on the other side got very nervous and said my account has been locked. She doesn’t know why and that I have to go to a branch. I happen to work 12 hour shift 3x per week. I wasn’t able to access my account for 3 days. Few days later I went into a branch and found out that Wells Fargo couldn’t not verify my identity over the phone and their representative locked me out.
Now if you keep savings in separate banks then this does not become an issue.
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Senior Contributor

Re: Suggestion - Keep savings account separate

I have what I called a tiered savings strategy  I keep $500 in my checking account that I do not include in my running balance that I can access quickly if needed.    I keep $1500 in a local CU (not where I have my checking)  that I can get to easily, but not as easy as the cash in my checking.  I keep savings for things like down payment on car, cash I am holding for DD, charitable donations, and vacations in a Money Market earning higher interest than other Checking and Savings.  I then keep my true emergency savings in 5 CDs with one CD maturing each year, so that when one matures this year I can roll it over to a 60 month, rinse and repeat.    If I need this money I might lose some interest in a penalty, but I am OK with that as this is money I don't want to touch.

 

 Edited to add:  I acutally have 2 checking accounts that hold an extra $500 each.   So in reality I have easy access to $2500 in cash if I need it quickly. 


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Valued Contributor

Re: Suggestion - Keep savings account separate


@Blodreina wrote:

Many banks' debit cards allow you to select "savings" at ATMs for cash withdrawals, and it'll work just the same; I've confirmed this with a number of banks over the years.  This is concerning because if your debit card is ever compromised and you have a savings account with the institution, your savings account/balance could be at risk too.

 

Since noticing this, my savings and checking accounts are at separate banks.  Just thought I'd share the suggestion.


What “Catch Me If You Can” Frank Abagnale Says About Debit Cards


“I don’t have (a debit card),” says Abagnale.

 

“I use only credit cards, because if somebody gets my card number and charges $1 million, my liability—by federal law—is zero.”

 

“But when you use a debit card, you’re exposing the money in your account. And even if you use your debit card every day for the next 25 years, it won’t raise your credit score one point.”

















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