Are there negative effects from using a single banking institution for all mortage, loans, credit cards etc.?

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I currently use a credit union and have my mortgage and a equity line of credit with another bank but am considering switching those loans to the credit union. I’m just not sure it is smart to “put all your eggs in one basket”. The interest rates would be lower with the credit union for the equity line. Are there fees that would make such a move more costly in the long run?

  1. Reply
    May 2, 2011 at 4:29 am

    Fees would depend on the institution. I have all my accounts in one place and see no problem with it. My credit cards are elsewhere, but that is because my bank underwrites for another bank. No biggie.

  2. Reply
    May 2, 2011 at 4:44 am

    Fees would have to be disclosed up front, wouldn’t they?

    I understand what you’re saying, it’s nice to have a fall back position with a different financial institution in case there are any problems with the one you plan on doing your business with.

    I presently have my chequing and savings with my credit union and our line of credit and mortgage through a different institution. We ARE going to switch ours over, but figured we’d explore low (or “NO”) fee options to keep our foot in the door with other institutions.

    My credit unions fees are much lower than the banks I’ve dealt with, and I’ve no reason to believe that there are hidden fees that will “bite” me.

    Beside, if all else fails the big banks are unlikely to refuse my business if I do have to go back, right?

    Hope this was some help.

  3. Reply
    candi h
    May 2, 2011 at 5:17 am

    I do not see a problem with it. You are keeping all of your accounts in a bank that you trust and enjoy working with. There is nothing wrong with that. Lenders just want to see you managing the accounts and paying on time.

  4. Reply
    May 2, 2011 at 6:17 am

    Having all your accounts at one bank can help or hurt you depending on your account history with that bank. For instance, many banks have loyalty programs that rate you based on you average balances, payment history, etc. Based on that rating, you can get preferred pricing, fee waivers, and rate discounts. For instance, many banks offer “relationship” rates that look at your combined balances in checking, savings, and CD’s. I’ve seen many a customer who had CD’s at every bank in town looking for the best rate who could have received a better rate by simply sticking with one bank.

    On the lending side, sometimes refinancing may seem enticing, but you may pay early close fees which would outweigh the money saved with a lower rate. Most banks also typically have some sort of fee rolled into their loan products such as a prepaid finance charge or annual fees that vary from bank to bank so be sure to compare apples-to-apples when you consider making a switch. A good banker will give you this information and many banks have tools that can easily compare the monthly payments, total interest paid, etc.

    Based on my own background in banking, I’ve found that for the most part, it was more beneficial to have one bank for most of your accounts. More and more, banks use profiles of a customer’s financial situation to determine the best products and services for that customer. In my own experience, it was easier to find ways to help customers when I had more information to examine.

    I can think of one instance when this relationship hurt one of my customers. This customer cosigned on her child’s line of credit. When the child was unable to make payments, my customers accounts were automatically debited for past due balances. This was a pretty rare situation, but it’s at least one example of how loyalty to one bank can hurt you.

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