How many bank accounts is too many?

August 12, 2015 2:41 PM

I have credit cards and banking accounts scattered across a bunch of different institutions. I've just kind of patchwork-accumulated them over the years and I'm now wondering if this will have any actual impact on my credit score or have detrimental effects to my finances.

I'm in Canada. I have:
- a chequing account, savings account and TFSA with PC Financial.
- another chequing account and high interest savings account with Tangerine.
- a credit card with CIBC (I've had it since I was 18 and basically just have one recurring bill on it but otherwise never use it because of high interest and no rewards)
- another with BMO (this one is about 7 years old and currently my primary).
- no credit card debt, some student loan debt I'll have paid off at the end of the year

I got frustrated with the terrible airmiles rewards with the BMO credit card, so I got a piddly $1000 Scotiabank Scene VISA to rack up some sweet sweet movies (I see many). When I picked up my card today, they said I had to get a chequing account so that I could pay my bill online instead of having to go into the branch every month. This chequing account is no-fee because I'm a student (and will be for many years).

I mean, I can keep track of it all - it's not really a big deal since my finances are fairly simple and I do 99% of my banking online. I also have a bit of a "system" now where I split up my different forms of savings (emergency fund, main savings, etc) into the different accounts. But are there any repercussions for being so spread out across institutions? Should I possibly migrate over to Scotiabank? Even though Tangerine's owned by Scotiabank, it's still pretty separate. With Tangerine, you get interest on the money in your chequing account, and I also like the ease of dealing with online-only institutions. I mean, I had to make an appointment just to pick up my credit card from Scotiabank today (where they tried to sell me on a different credit card). That being said, maybe it would just be easier to have all of my money in one easy online-login.

What do you guys think? Is this multiple-accounts system even uncommon? I have no idea because all of my friends are poor students who barely even have one account and some don't even have credit cards, which in itself is making me wonder if I have too many.

Thanks everyone!

posted by thebots to Work & Money (13 answers total)

Best answer: I'm an American who has:

3 checking accounts
5 savings accounts
3 brokerage accounts
12+ credit cards (currently; I've had upwards of 20 total)

And my credit score is in the top 10%.

I'm pretty sure Canada is not all that different. Your credit score is a measure of how well you handle debt. But it's up to you to decide how many banking products you're comfortable managing.

You're fine.
posted by rabbitrabbit at 2:51 PM on August 12, 2015 [3 favorites]

Best answer: I don't know if things differ between US and Canada, but this is about what my banking life looks like and my credit score is excellent. I don't think how many checking/savings accounts you have factors into it at all.

Credit scores are based on credit age and usage. Definitely don't close any credit accounts, that'll hurt you. It sounds like you're doing fine.
posted by phunniemee at 2:52 PM on August 12, 2015 [1 favorite]

Best answer: My boyfriend has so many credit cards I can't count and he has excellent credit. He keeps low/no balances and pays on time. Applying for credit from multiple lenders at once can hurt you, but the number of accounts you hold does not.
posted by shesbenevolent at 2:53 PM on August 12, 2015

Response by poster: Hooray! Thanks everyone. You have set my mind at ease. I will now commence balling out of control continue to be very responsible with my money.
posted by thebots at 3:14 PM on August 12, 2015 [1 favorite]

From the other perspective, I do NOT like having lots of bank accounts/credit cards/etc. The main reason is that I hate keeping track of them. The second reason is that the total minimum required in all of them prevents me from maximizing the return on the money.
posted by Ms Vegetable at 3:31 PM on August 12, 2015 [1 favorite]

You're getting a lot of US advice here.

I can't speak to Canada, but I do know credit scores work completely differently in the UK than in the US. The advice you're getting here (don't worry about having dozens of lines of credit/accounts, don't close lines of credit, you're fine, etc.) is great in the US, but would not result in a good score in the UK.

The US retail banking system is infamously weird. You should check the situation in Canada.
posted by caek at 3:32 PM on August 12, 2015 [1 favorite]

Lots of credit cards: might actually help credit score, assuming they're not super-overextended, and that they're paid promptly. There's a small chance that if you have lots of accounts, having lots of available unused credit might count against you on a mortgage application or a similar situation where you're under high scrutiny (happened to me once years ago), but even then, it might not be a big deal.

Lots of checking accounts: nobody cares as long as you're not bouncing checks or committing fraud or anything. No effect on credit score one way or the other.
posted by gimonca at 3:32 PM on August 12, 2015

You may find it helpful to contact the Financial Consumer Agency of Canada, where you can request your credit report for free and request your credit score for a fee.
posted by obscure simpsons reference at 5:53 PM on August 12, 2015

You're getting a lot of US advice here.

FICO offers credit products in both the U.S. and Canada, and Trans Union and Equifax sell credit reports on both sides of the border, so both credit scores and the underlying credit reports are likely to come from the same company throughout the U.S. and Canada.

The exact process for calculating the score is proprietary, so on both sides of the border we're guessing at the internals, although we have a good idea about how they work. Some of the details--like the range of numbers from high to low--may vary between the U.S. and Canada. It's reasonable to assume that U.S. borrowers would be scored against a population of U.S. borrowers, and Canadians scored against Canadians, so there may be subtle differences there. The general principles would be the same.

I've worked in credit in the past and worked (at the time) with Canadian credit reports that look exactly like U.S. ones.

Can't speak to banking as much, but I don't think the differences in the ways banks are founded, organized, regulated, etc. would affect the specifics of this question very much.

(I'll note that the majority of the advice you've linked in your UK-based link is perfectly good for US residents as well. A couple of individual details are different, but we may not be as different as you think.)
posted by gimonca at 5:12 AM on August 13, 2015 [2 favorites]

Iit may be a bad move from the perspective of account fees and fiscal prudence. My Canadian RBC bank account costs me $4 a month. So just under $50 a year. Multiply that by 4 bank accounts and you're looking at almost $200/year. Do your credit cards also have fees?

Canadian banking is pretty expensive in terms of charges so extra accounts can add up pretty quickly.
posted by srboisvert at 12:53 PM on August 16, 2015

FICO offers credit products in both the U.S. and Canada, and Trans Union and Equifax sell credit reports on both sides of the border, so both credit scores and the underlying credit reports are likely to come from the same company throughout the U.S. and Canada.

As an aside - these scores don't cross borders. My wife and I have exemplary credit in Canada and UK but in the US were often considered poor credit risk due to a thin file despite closing in on 50 years old with a lifetime of consistent bill payment.
posted by srboisvert at 12:57 PM on August 16, 2015

(I'll note that the majority of the advice you've linked in your UK-based link is perfectly good for US residents as well. A couple of individual details are different, but we may not be as different as you think.)

I live in the US and have spent the last couple of years deliberately behaving in the way that banks here consider predictive of of creditworthiness (notably the basic fact that the more credit you have access too, the better). I've lived in Britain, Germany and Australian in the past. Things are pretty unusual in the US.

That said, I'm glad you chimed in to confirm Canada works like the US. Absent that, the descriptions of how things work in the US were not obviously relevant!
posted by caek at 2:03 PM on August 16, 2015

It's not about the scores or the underlying reports crossing borders (Canadian scores have a slightly different numeric range than the U.S.), it's about the scoring algorithms.

Credit histories tend not to transfer internationally for other reasons, notably that as soon as a report is labelled international, it becomes a lot more expensive. And if you've just moved to another country and apply for a loan, it's sort of reasonable for you to be treated as "just starting out". (Unfortunately, your previous credit history also might get ignored for some trivial reason like the lender wasn't willing to pay an extra fee to get it.)

If you're asking about credit scoring, declaring bankruptcy is likely to sink your credit score no matter where you are.
posted by gimonca at 6:06 AM on August 17, 2015