Stay with the bank

Steve is wondering if he and his wife should have their emergency fund in another bank, one different one from where they keep their checking and savings accounts. Dave thinks it's okay for them to stay with their bank, and he explains why.

QUESTION: Steve and his wife are debt-free except for their home, and they’re currently putting money aside for a fully funded emergency fund of three to six months of expenses. They have their emergency fund account in the same bank as their checking and savings accounts. Steve asks Dave if that’s okay, or if they should move it to a different bank.

ANSWER: No, that’s okay. I wouldn’t worry too much about it. If you had two or three million in that bank, then I’d start to worry.

The only exception to that would be if you have loans that you owe to that particular bank. Then, I would probably move my emergency fund out of there just in case something went wrong with the loans. Almost all commercial loan documents now give the bank the right to take money out of your account to pay the loan — without your permission. If you had a car loan, for instance, with that particular bank, I wouldn’t keep a bunch of money in that bank.

They normally don’t do that unless you’re behind on the bill — way behind on the bill — and then it gets pretty adversarial. Sometimes there can be things like a simple clerical error, and there’s no chance of that happening if the money’s in another bank. But in your situation, I don’t see any harm in you being there.