Reasons why you may want to close a bank account or two

Now that many major banks are getting rid of free checking accounts, it may be a good time to assess just how many banks accounts you have -- and how much they may be costing you.

There's even a slight chance you might have more accounts than you realize. CESI Debt Solutions recently conducted a survey (so new that the survey isn't online yet) that found that 15% of married couples will admit they have a bank account that their spouse doesn't know about.

These days when it comes to bank accounts, less may be more. Here are several reasons why:

Bank fees. A handful of financial institutions, like Wells Fargo, have said that they're going to stop offering free checking to new customers, and some places, like Bank of America, are reportedly considering some form of tiered checking (where you can have free checking if you minimize your trips into the branch) starting next year. (No plan has been formally announced yet.) So obviously if your bank starts charging a maintenance fee, it makes much more sense to have one or two accounts than six or seven.

More accounts can cause more confusion. "My head started to spin," says Michael Kay, a certified personal finance adviser and the president of Financial Focus LLC, headquartered in Livingston, New Jersey, referring to a young couple advised. The couple, who were about to be married, each had their own account and then a joint account that they used for paying bills. "It may work well for some people, but moving this money from one account and switching it to another--that amount of manipulation and maintenance can get pretty complex."

And expensive. Make a few mistakes moving that money around you'll end up paying handsomely for the error. Should say a gasoline charge go through at a time when you thought you had more money in a particular account -- but you forgot you transferred some funds -- you could unleash a chain reaction of overdraft charges and insufficient fund penalties.

More accounts can lead to a higher risk of identity theft. That's one of the conclusions of a recent article. I have to admit, if you feel like you're safe having one account in a bank, you should feel equally safe having two or three or more accounts. You never want to take stupid risks, but life's too short to worry about every possible way you can be targeted by an identity thief.

There is the environmental factor. More accounts can lead to more paper statements. Well, unless you opt for electronic statements.

I have several checking accounts between my bank and credit union, and I could definitely eliminate one or two that aren't doing much more than collecting cobwebs. But for the most part, I like that at my credit union, I can have one account dedicated solely to saving up for a vacation.

"Each customers needs are different, and some people definitely do better with several accounts than just one," says Ryan Bailey, head of deposit of products at TD Bank.

But if you're hanging onto multiple accounts out of nostalgia, you may want to think again. "Consolidating accounts can help you avoid fees or at least minimize the percentage impact of certain fees. It can also qualify you for better bank rates, especially on money market accounts. Meanwhile, with the FDIC deposit limit raised to $250,000 temporarily -- and perhaps soon to be permanent -- consumers can safely consolidate more money in accounts than ever before," says Richard Barrington, CFA and spokesman at

Financial Focus's Michael Kay concurs. "People are looking for the simplest, easiest way of living their financial lives, so it doesn't absorb all of their time and energy. So just for that reason alone, the fewer the accounts, the more simple financial management should be. You need to ask yourself: 'What's enough to do what needs to be done? If you can't achieve your goals with one checking account and one savings account, then you expand them to meet your personal needs. But there should be a real good reason to have 12 accounts."

Geoff Williams is a frequent contributor to WalletPop. He is also the co-author of the book Living Well with Bad Credit.
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