Closing a Virtual Bank
Well, not exactly a virtual bank, but Virtual Bank, the bank that I used for about a year.
As part of the plan to simplify our finance, I called Virtual Bank yesterday to close my account (they are quite nice to call me back to confirm with me after I sent the request via bank email). The account was opened in March 2006 and at one time it was my primary online bank when it had a better rate than Emigrant Direct and HSBC. But that didn’t last long and the account was almost empty for most of the time. In fact, their 4.60% APY even beats ING Direct’s rate, but still isn’t good enough for me to keep the account open.
After closing Virtual Bank, I still have five online bank accounts at ING Direct, Emigrant Direct, HSBC, IGoBanking, and FNBO Direct. I want to get rid of one or two more, but will wait till September after the promotion period at FNBO Direct ends to decide what to do. Fortunately, none of these banks requires minimum balance, so I can leave a few bucks in the account without having to close it. Who knows maybe some day one of them will offer a good rate. Then I can always move back in.
Now three or four online banks still seem to be a large number and if any new deal pops up later, I doubt I will keep quite and do nothing (FNBO is an example). The advantage of having multiple accounts is quite obvious to me: I can always find a bank with the best rate and shift my money to it. Then on the flip side, the drawbacks of having too many accounts include:
- Difficult to manage all the accounts;
- Money, even small amounts, will be all over the places and it could be even worse if the bank requires something like $500 or $1,000 minimum;
- Some banks do hard credit inquiry even for a savings account, so it could potentially damage the credit score if applying for several accounts in a short period of time (like within 12 months).
I may only have problem with the first one, but not the other two. Any other bad things of having too many accounts that I missed?
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