Benefits of established checking account

December 27, 2006 12:16 PM

Is there any benefit to keeping a checking account open?

I have a re-discovered checking account. It's been open since 1995 and was an old personal account before I got married. Once I got married, I have been using the joint account in a difference bank ever since. I thought I had closed it out, but I just realized it still is there with about a grand just sitting in it. When I did use it before I got married, I passed a lot of money through it. But it hasn't really been used in 3 or 4 years.

I'm thinking about closing it. But I don't want to close it if there is some benefit to keeping it around. So I am asking you smart people: is there a benefit to having a ten-year old checking account? Does it help my credit rating? I seem to recall that having a credit card for a long time is a good thing. Is the same true for a checking account? If I have a long held, but dormant account, would it increase the likelihood of getting a loan or something in the future?

I vaguely recall thinking about keeping it open to have my own account after we were married to have a private account which I could use to buy my wife gifts or for hookers or whatever. But I've clearly not used it and won't. But if there is some tangible benefit to just having it, I'd be fine with leaving the minimum balance ($500 or whatever) just sitting there.

TIA.

posted by dios to work & money (13 comments total)

Just to make clear: I know keeping money in a simple checking account is not an investment/savings strategy. I have other things for that purpose. I just am curious about the value of having the checking account itself.
posted by dios at 12:34 PM on December 27, 2006

Never write a check to a hooker.

That said, if you've got another account that you've had for a while, and don't need the relationship with this particular bank, I would close it. One less account to keep track of.
posted by HuronBob at 12:36 PM on December 27, 2006

First off, I second what HuronBob said about never writing a check to a hooker. Always use cash.

Secondly, the only reason that keeping the old account open is if you might ever take out a loan from that bank. Being a current account holder might lower the fees or improve your loan rate. Ask and find out. If this isn't the case with them, or if your current bank typically has better rates (a credit union, for example), then there is no reason to keep the old account open anymore.
posted by NotMyselfRightNow at 1:02 PM on December 27, 2006

I believe that closing accounts can have a short term negative effect on your credit rating, so if you're planning to buy a house or borrow money for another reason in the next six months or year, it might be worth keeping the account open.
posted by croutonsupafreak at 1:28 PM on December 27, 2006

croutonsuperfreak, I believe that's only for credit lines like credit cards, etc. (That's a problem because it reduces your available credit in relation to your debt load, making you appear to be overextended.)
posted by cabingirl at 1:39 PM on December 27, 2006

Another good reason to keep the amount open is ATM use -- avoid $8 in fees ($4 from the ATM and $4 from your bank was what I got hit for last time I took money out at a non-bank ATM) for taking money out of your joint account when the only ATM available is from the bank where you have your private account.
posted by SpecialK at 1:39 PM on December 27, 2006

Since you're presumably not earning any interest, you might take as much money out of it as possible or other uses:

a) Yes, it's beneficial to your credit report. Though unless you plan on applying for a slew of credit cards or buying a house very soon, it won't adversely affect your credit for long.

b) in addition to the ATM fee thing, you can use the check card (prsumably) with the account for online purchases since any credit card fraud is only going to go as far as the balance you have in it.

c) it is nice to have a separate account to buy your wife surprise gifts (and have the protection of using a credit card/check card) - my friend has an amusing story of trying to plan a secret surprise party for their anniversary and his wife wondering why she can't withdraw any money because they reached their daily limit.
posted by jbelkin at 2:20 PM on December 27, 2006

Another possible reason to keep open an extra account is when that bank has a branch near someone you may want to transfer funds from quickly. They can just deposit cash into the account and you can withdraw it immediately.
posted by StickyCarpet at 2:30 PM on December 27, 2006

Closing the account will not affect your credit score unless you have a line of credit (like an overdraft protection line of credit) attached to the account.

Think about it this way: if you didn't have this account already, would you withdraw $500 from another account in order to go to this bank to open it? If you would (e.g., for the convenient ATMs, to build a relationship with this bank, to hide purchases from your wife, etc.), keep the account open. If you wouldn't, go close the account and don't give it another thought.
posted by decathecting at 2:56 PM on December 27, 2006

I find it odd that you only recently rediscovered that bank account. Don't you receive monthly statements? If it has been inactive all this time then perhaps the bank has made annual or monthly charges against it for lack of activity. Banks do that to close out small accounts.
posted by JayRwv at 5:35 PM on December 27, 2006

If you like to use Paypal, Direct Deposit, or anything else like that, I think it's a good idea to keep all those activities in a bank that is not your main bank. I have a second bank account I use for just this purpose.

Dunno on the credit score question, though.
posted by ikkyu2 at 6:05 PM on December 27, 2006

a) Yes, it's beneficial to your credit report.

No it's not. I'll send $20 to anyone who can produce a credit report with a tradeline for a checking account kept in good standing. And by "I'll send $20" I mean "I will never ever have to pay out on this bet."

The only time you're going to find anything about a standard checking account in a credit report is if it goes negative because of fees or bad checks and is turned over to a collection agency. Then you would end up with a collections entry (bad) or a paid collections entry after you paid the debt (almost as bad).

Under no circumstances are you going to find a good entry in a credit report for a checking account because a checking account is not extended credit.
posted by phearlez at 8:10 AM on December 28, 2006

I would ask the bank. I know that sounds silly but hear me out. I had an old Bank of America savings account that I stopped actively using but still had a small amount of money in (I had transferred most of my savings to high-interest accounts elsewhere). I finally realized it wasn't doing me any good, so I went to close it, but asked the customer service representative why I might want to keep it, particularly when I get more than 10 times the interest elsewhere. I wasn't rude about it, just genuinely trying to cover my bases. She and I couldn't think of a reason, so I closed the account.

You may find that there are certain perks associated with that account, such as free travelers cheques, etc, that might be worth keeping. I'd check the bank's website for details on the account, or ask a representative. Otherwise there is no real "value" and in fact, if you'd otherwise invest the money at a higher return, you could be "losing" money (potential income) by keeping the account. It has no impact on your credit report (unless you'd use the $1000 to pay off credit card debt and bring down your revolving balance, but that's another post).
posted by ml98tu at 4:08 PM on December 28, 2006