Is it bad to have all my accounts at one bank?


Q. What do you and your experts think about taking a credit card that is issued by one’s bank? Does having your savings, or checking account, at the bank work for or against you if they also have your major credit card?
– Shopping around

A. Taking out a credit card with your personal bank is not necessarily a bad thing.

In fact, many large institutions operate on a relationship basis. This means that the more business you do with the bank, the more you will be rewarded for your loyalty.

“For example, a bank might offer lower rates on mortgages and/or higher rates on savings accounts for long-time customers who have all of their accounts – including one or more credit cards- under the same roof,” said Michael Green, a certified financial planner with Wechter Feldman Wealth Management in Parsippany.

He said even if this does not apply in your situation, the most important factor to consider when choosing a credit card is how it will ultimately benefit you.

“Credit cards can be a powerful tool for managing cash flow, but they can be a blessing and a curse,” Green said. “If you aren’t careful, the benefits might not outweigh the costs.”

Whether the card is issued by your primary bank or a third-party, there are certain types of credit cards you will want to avoid — namely any card with an annual fee, Green said. Although they have certainly dwindled down in recent years, many credit card companies still require an annual fee in order to take advantage of perks such as cash back, airline miles, hotel stays and travel discounts.

Green said while they might seem like a good deal on the surface, credit cards with high annual fees are rarely worth the cost to use them unless your spending surpasses certain levels.

The next time you are in the bank and a representative asks you to apply for a new credit card, it would be best to leave with a copy of the offer’s terms and compare credit card offers at home, Green said.

“You should pay special attention to the amount of the sign-up bonus, its minimum spending requirement and if there are any other benefits for new applicants such as a waived annual fee or even a statement credit,” he said. “It can be hard to say no to a friendly representative at your bank, but applying for a credit card is an important financial decision.”

He said it’s worth politely declining to fill out a new credit card application on the spot while you take time to consider if you are getting the best offer possible.

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