Negative Effects of Having Many (Free) Checking Accounts?

[Maggie66]

I wanted to throw this out there and see what others here think. What are the negative Effects of Having Many Checking Accounts?

I've identified two possibilities of having too many accounts:

1) Too many inquiries showing up in ChexSystems and therefore being declined for new checking accounts.
2) If a hard pull is conducted it could negatively impact your credit report.

Are there any others? I suppose someone could argue that it may become difficult to handle many accounts and end up forgetting/losing initial deposits. Or, signing up for a checking account with a monthly fee could cause the account to go negative, which in turn could end up in collections.

My current thinking is to slowly sign-up for more and more checking accounts. This would allow me to establish relationships with CUs/banks that could potentially open up targeted offers down the road for other types of financial services (HELOCs, 0% APR transfers, rewards for increased savings, etc).

 

[smittytabb]

I wanted to throw this out there and see what others here think. What are the negative Effects of Having Many Checking Accounts?

I've identified two possibilities of having too many accounts:

1) Too many inquiries showing up in ChexSystems and therefore being declined for new checking accounts.
2) If a hard pull is conducted it could negatively impact your credit report.

Are there any others? I suppose someone could argue that it may become difficult to handle many accounts and end up forgetting/losing initial deposits. Or, signing up for a checking account with a monthly fee could cause the account to go negative, which in turn could end up in collections.

My current thinking is to slowly sign-up for more and more checking accounts. This would allow me to establish relationships with CUs/banks that could potentially open up targeted offers down the road for other types of financial services (HELOCs, 0% APR transfers, rewards for increased savings, etc).

I had been wondering the same and had come up with similar cons. I'd be interested to know the number most people have and if they are personal or business related. Also would be interested in how recently they were opened and what problems people run up against if they have too many in terms of Chex.

 

[InstinctX]

I opened a checking & savings accounts at a local CU a few months back. To my surprise, they did a Hard Pull

 

[William Charles]

I opened a checking & savings accounts at a local CU a few months back. To my surprise, they did a Hard Pull

What was the name of the CU? I compile a list of this for reference.

In terms of ChexSystems, most financial institutions are not inquiry sensitive. People seem to run into problems when they have 12 or more new inquiries on their file in the last twelve months (so basically one a month per year). E*Trade, Perkstreet and BBVA are all known to be a little bit more sensitive (10 inquiries+ will cause problems).

I'd recommend signing up for the current bonuses banks offer (you should be able to get at least $100 per bonus, up to $600 in some cases) rather than worrying about future targeted promotions.

 

[InstinctX]

What was the name of the CU? I compile a list of this for reference.

It's a tiny CU in my locality with 3 branches, so prefer to not include them. I did request a copy of my CHEX report afterwards.

Because of this Hard Pull, I was systematically denied the Citi 100K AA card - due to the number of hard inquiries within a short time period.

However, it seems that First Niagara Bank may have done a hard pull on the accounts that I opened.

 

[Jack]

I've got a bunch. I started signing up for checking accounts back in the coin days to have places to take coins so I hit up all the local banks and CUs. I ran into the problem of too many Chex inquiries at least once and got denied for that. Too many Chex inquiris for them was three in six months. Not all banks or CUs check Chex. The only down side is if you don't use some of them for a year or so they might begin taking a dormant fee like $5 per month. I set up Alliant to send them all a couple dollars every quarter. That creates enough activity for the ones I don't use on a regular basis.

 

[JohnThomasJwlrs]

Sandia Area FCU did a hard pull when adding a cking acct to my already existing savings and car loan accts.
The rub was that I was told twice, by two different people, that they would NOT do a hard pull. Told them I was getting ready to refi and would just wait til after to add the acct if that was their policy. Again, specifically told NO, won't happen.
Got home that night and there it was in my credit monitoring service.

 

[Nina]

As a data point, I've opened lots of checking/savings accounts in the past 6 years. At some point, I opened around 20 accounts in 1 month. In all these years, I was rejected only once by some credit union. I have never been rejected by a bank. I still have around 30 open accounts in various banks/credit unions.

 

[DebentureBoy]

Nina -- were your apps in-house or online? 20 in a month seems outrageous! (Said in admiration, not any kind of negative connotation).

I've been denied due to Chex with far fewer apps than that. I've noticed that some FIs have different standards for in-house versus online -- with in-house apps being OK with multiple Chex hits while on-line apps are denied.

I'm sure this also depends on which Chex product the FI is using and which back-end software package they have. I think, but am not sure, that there are at least a few Chex products available -- with different (or selectable) criteria for rejection.

As to the OPs question, I think you've nailed the biggest issues. There is probably some small possibility of increased chance of ID theft, but I really think it's a small chance. It would be a serious pain if things got out of hand.

One thing to keep in mind about the hard pulls is that they are CRA specific and don't result in a new credit account (unless you are getting some credit product along with the deposit account). A hard pull for a CC results in both an inquiry and a new account, which both dings your score (a little) AND creates a new account, which some CC issuers use in making their decision to extend credit to you.

One question I have is does Chex provide instant accounting like the credit CRAs? Or, do they compile things daily for reporting. This goes to a potential workaround if they compile daily -- do an app-o-rama of deposit accounts. Anyone know if this would work?

 

[Nina]

It was a long time ago, so I don't remember exactly. I think both. There was a bank that offered 3.45% for up to $1,000, so I opened 25 accounts in 2 months. Also, I opened a couple of bank RCAs online and a couple of BAM local accounts for bonuses. After that, I got rejected by a credit union for having too many accts. I ordered a free Chex report after the rejection. I looked at it and totally agreed with them: I myself would not open an acct for a person with this kind of record either.

 

[Thomash]

I opened a checking & savings accounts at a local CU a few months back. To my surprise, they did a Hard Pull

Keep in mind if you that if you enroll in a checking account and don't opt out of overdraft protection (basically a LOC for your account) you will generally get a hard pull.

 

[JoeK]

I see no downside to having many checking accounts. I have so many that I've lost track - I probably have at least a dozen accounts still open. Others have been closed due to inactivity. As long as there are no fees involved, I will leave $1 in an account if I don't need it any more.

I currently have a USAA checking that I use for my paycheck deposits and as a central hub for transferring money around since I can set up free ACH transfers to any other accounts. I also have a Lake Michigan Credit Union rewards checking (3% up to $15,000) that I use for savings/emergency fund. I have a local credit union account that I keep active in case I need to be able to go to a physical bank for whatever reason. I have a Fidelity checking account that I use to deposit my FIA Amex rewards so I can get the full 2% cash back.

I will open a new account generally any time I can get at least $100 bonus without having to jump through too many hoops. I have never been denied or had any issues due to ChexSystems inquiries.

 

[jd13]

Sandia Area FCU did a hard pull when adding a cking acct to my already existing savings and car loan accts.
The rub was that I was told twice, by two different people, that they would NOT do a hard pull. Told them I was getting ready to refi and would just wait til after to add the acct if that was their policy. Again, specifically told NO, won't happen.
Got home that night and there it was in my credit monitoring service.

I had something similar happen albeit with a major cell phone carrier. Took me months but finally a BBB complaint got the pull removed from my report.

 

[Alex1432]

I see no downside to having many checking accounts. I have so many that I've lost track - I probably have at least a dozen accounts still open. Others have been closed due to inactivity. As long as there are no fees involved, I will leave $1 in an account if I don't need it any more.

I currently have a USAA checking that I use for my paycheck deposits and as a central hub for transferring money around since I can set up free ACH transfers to any other accounts. I also have a Lake Michigan Credit Union rewards checking (3% up to $15,000) that I use for savings/emergency fund. I have a local credit union account that I keep active in case I need to be able to go to a physical bank for whatever reason. I have a Fidelity checking account that I use to deposit my FIA Amex rewards so I can get the full 2% cash back.

I will open a new account generally any time I can get at least $100 bonus without having to jump through too many hoops. I have never been denied or had any issues due to ChexSystems inquiries.

I'm curious as to what benefit there is in leaving the accounts open? For example today I reset my hsbc online checking password I used that account back in the day of high interest checking and there is like $10 left. I reset the password and now I'm thinking why not just cancel it? I have an emigrant account with $10 as well that I should probably reset the password for as well. I usually only notice these things when Mint.com complains that they can't log in and even then it takes me months to fix since its such a small amount that's left there.

 

[El Ingeniero]

I'm curious as to what benefit there is in leaving the accounts open? For example today I reset my hsbc online checking password I used that account back in the day of high interest checking and there is like $10 left. I reset the password and now I'm thinking why not just cancel it? I have an emigrant account with $10 as well that I should probably reset the password for as well. I usually only notice these things when Mint.com complains that they can't log in and even then it takes me months to fix since its such a small amount that's left there.

Well, if they offer mobile deposit, they would be great for MS.

 

[Maggie66]

I'm curious as to what benefit there is in leaving the accounts open? For example today I reset my hsbc online checking password I used that account back in the day of high interest checking and there is like $10 left. I reset the password and now I'm thinking why not just cancel it? I have an emigrant account with $10 as well that I should probably reset the password for as well. I usually only notice these things when Mint.com complains that they can't log in and even then it takes me months to fix since its such a small amount that's left there.

The benefit that I imagine, although have not confirmed, is that leaving accounts open lengthens your relationship with the bank. I hope that if they see you were a long time customer, they would be more willing to accept MS habits or forgiving when your MS habits grow to large. In addition, I'm hoping they would send offers (0% BT transfer, bonus for increasing activity in your account). Finally, if the bank offered some new amazing product, you would already be a customer and would be able to jump in on the deal immediately.

 

[El Ingeniero]

Downside is the hard pulls.

 

[fordman85]

I would imagine having too many Chex System inquires may be a problem as you may be looked at as someone who is chasing opening bonuses. I got hit with that once about a year ago when trying to open up a bank account just for the bonus. As far as existing accounts, I would imagine just having to keep track of them all and make sure to keep the accounts alive. Some banks take AA against dormant accounts.

 

[El Ingeniero]

Downside is the hard pulls.

I just took another one for a Schwab account. I'm hoping that won't kill my chances at US Air and Citi AA Plat cards next month.

 

[fordman85]

I just took another one for a Schwab account. I'm hoping that won't kill my chances at US Air and Citi AA Plat cards next month.

Don't worry too much about the inq. If you ever do get denied, never forget the backdoor numbers. Talking to an actual human can sometimes get those decisions over turned, and give you that "got new credit" smile

 

[JoeK]

I'm curious as to what benefit there is in leaving the accounts open? For example today I reset my hsbc online checking password I used that account back in the day of high interest checking and there is like $10 left. I reset the password and now I'm thinking why not just cancel it? I have an emigrant account with $10 as well that I should probably reset the password for as well. I usually only notice these things when Mint.com complains that they can't log in and even then it takes me months to fix since its such a small amount that's left there.

There's not really any benefit at this point. I mainly leave them open out of laziness. It's easier to leave it with $1 than to have to go through the hassle of closing it.

Back in the day when rewards checking accounts were much more profitable, interest rates were changing constantly, so I would often be moving money around from one bank to another depending on who had the highest rate at the time. So it made sense to leave them open because they might raise their rate again. But most of that activity has died down in the low rate environment.

 

[fordman85]

There's not really any benefit at this point. I mainly leave them open out of laziness. It's easier to leave it with $1 than to have to go through the hassle of closing it.

Back in the day when rewards checking accounts were much more profitable, interest rates were changing constantly, so I would often be moving money around from one bank to another depending on who had the highest rate at the time. So it made sense to leave them open because they might raise their rate again. But most of that activity has died down in the low rate environment.

I hear you on the laziness thing. To have to drain the account, call it in explain why you are closing it etc. I figure though, you never know when things may turn around and it's easier to already be established than it is to have to open it up again. Some banks don't like it when they see you were a past member that closed out and then came back.

 

[Codename47]

Just an FYI, it is difficult to keep up with the changes in policy if you have many accounts. I kept about $3 in a Key Bank account from about 2007 until 2013. One day I got a letter from them saying I owed $20 because they had started charging me a $5 fee each month.

 

[Lanhi]

That was a very good point you’ve cited via this thread. Thankfully i have presently one account in a Credit Union establishment in New Jersey. But i really want to know what are the cons if we have more than two account in a Credit Union establishment or in a bank ? How it will affect in checking the accounts ? Any advices and suggestions would be greatly appreciated. Thanks in advance.

 

[Miles Hustler]

PNC is an example of a bank that is inquiry sensitive.

Another possible "downside" which would apply if you're paying attention is you could end up loosing money through inactivity (or other monthly) fees, and eventually loosing the account altogether if the relinquishes the money to the state.

 

[zeppoloveskafka]

I lost my whole childhood allowance due to PNC (or melon or whatever it was called) charging a monthly fee and we apparently never got any statements. This was preInternet.

The real downside if probably lost opportunity in new checking account bonuses. I currently have several inactive ones from the days when I was able to get lots and lots of MO.