Personal Finances

Joyless Banking Accounts

Hi. My name is David, and I have a problem.

I have too many accounts.

More than 53 different checking, savings, brokerage, credit cards, store cards, and retirement accounts. Spread across more than 16 different providers.

Seems a little excessive, doesn’t it?

How did this happen?

As I look back across the accounts smeared across the financial landscape, I still remember the convincing rationale for each account I opened. The four Netspend accounts? Opened to capture 5% interest on $10k of savings (later nerfed to only $2k). The checking account and savings accounts at Online Bank #2? Those enabled the Netspend habit, and then later, to capture a higher interest rate than Online Bank #1. Miles cards at Brick and Mortar Bank #2 and Credit Card Company #1? They provided some sweet free travel. The SEP 401(k) plans for my wife and me? Enabled backdoor Roth contributions. Online Brokerage #4? Free stock and options trades.

To be fair, several of these accounts were opened by my employers, past and present. And I had no choice who serviced my student loans or mortgage.

In addition to my spouse’s and my accounts, I also include child accounts because I’m the one managing them. These include one savings accounts for each child, a debit account and a Roth IRA account for each of my two teens, and a 529 account opened years ago. Eleven child accounts in total.

In the face of so many valid reasons for opening these accounts, why do they no longer bring me joy?

Reason #1: Complexity

Time spent reconciling. Tracking transfers between accounts. Ensuring minimal balances. Mistakes have been made.
Complexity does not bring me joy. I’d rather spend the mental energy thinking big personal finance thoughts.

Reason #2: Fees

Brick and mortar banks love their fees. I avoid the fees, but doing so often means keeping cash sitting around. I rarely go into a physical bank anymore but I’m still paying for the privilege. Doesn’t bring joy; time to go.

Even the online banks have fees, particularly around restricting more than a few withdrawals from savings each month. I had separate accounts for mortgage, student loan, and charitable accounts to avoid these fees. No joy.

And those mileage cards? Each one of them has an annual fee but a free first-year. Jettisoned as soon as the miles cashed in. They’re dead cards; they just don’t know it yet.

Reason #3: Float

Due to minimum balances, several of those checking accounts have money just sitting there to prevent zero balances and the associated fees. Multiple that several times. Just. Sitting. There.

Goodbye, Netspend

The Finance Buff turned me on to the 5% interest offered by Netspend over four years ago. The interest is only on the first $2k, which is about $70/year more than I get from my other online savings accounts. So far I’ve avoided the gazillion fees that this prepaid card vendor employs but the extra complexity just isn’t worth it. Goodbye, fee-filled prepaid card vendor.

Branch-Never

Second to Netspend, I’m looking forward to joining the ranks of the 50 million customers who kick the brick-and-mortar bank to the curb. It may be too late to be a “branch-never”, but being a “branch-never-again” sounds good. I’m not Jamie’s patsy.

Going the Distance

Credit card miles took us to Spain and back. We opened six different cards, each with annual fees that were waived the first year. I’ve already closed two of them, and four more soon follow suit, right before their anniversary dates. Goodbye, mileage cards.

Online Brokerage

I have accounts at six different online brokers. Three of those were opened for me by previous or current employers. There’s not much reason to keep three of those around, especially since two of them have zero-dollar balances already. Goodbye, joyless brokerage accounts.

Student Loans

I consolidated my student loans years ago, shortly after graduate school. Their balance is so low that I’m now ready to pay them off completely. Goodby, student loan servicer.

The Name’s Bond, I-Bond

I opened a Treasury Direct account and bought inflation-indexed Series I Bonds after reading about them on The Finance Buff, over 8 years ago. But they no longer have a place in my master plan. I won’t miss the cumbersome secure login process that requires entering your password by clicking buttons on a virtual keyboard. So long, Treasury Direct.

Growing Pains

The last place to reduce complexity is the child accounts. With child #1 getting ready to launch, I’ll say goodbye to both her savings account, debit card account, and Roth IRA account. And since she’ll be going to college, the 529 account will be next to go.

Conclusion

When the dust settles at the end of January, I’ll have given pink slips to nine different companies and axed 23 accounts. Almost 4/9ths. There are other accounts that I’d love to close but won’t because of other’s convenience (looking at you, Paypal and Venmo). And the store cards are my wife’s complexity, not mine, so they’ll probably stay open.

Here’s what I expect things will look like by the end of January.  Still pretty complex but mostly just retirement accounts that I’m not ready to consolidate and accounts for my children:

I’m feeling good about my plan to clean house.  What are your financial accounts that have ceased to bring you joy?

Hasta luego.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.