How many Bank Accounts?

[DL1WDW2]

Good advice about dangers of overdraft protection.
Also should have another name on account that is P.O.D payable on death so funds can be transferred legally.

Also pay attention to monthly service charge fees.
My son , not married, still has high school checking & savings in small town with his sister named on account… It’s small local so no free ATM in Orlando area…
If he closes those accounts after 20 years…Will it affect his credit scores?
Thanks for assistance . They recently started charging a monthly fee , want to close but credit score ??? Question.

 

[_19disnA]

Not sure why you would need more then a checking & savings account? Why make it overly complicated? At my bank, you can set a daily ATM cash withdrawal limit and even if someone steals your card, they won't know the pin # unless you did something foolish like write it on the back of the card. Mine also allows for 'alerts' which sends me a text whenever a transaction has taken place. Never had any issues.

Credit score to me is a result of how you manage credit. Pay bills on time, use credit wisely (like for a car loan/etc.) and the rest will take care of itself. None of us know the exact formula used by those credit bureaus and too many seem overly focused on trying to artificially impact their credit score. Likely someone in h.s. will have a full-time job 20 yrs from now so their financial situation will be significantly different. The impact to your credit score will likely be minimal and wouldn't be the deciding factor if you find a better rate or lower fees offered elsewhere.

 

[bighuskermav]

Nm, delete

 

[Brian Noble]

One bank, two accounts (checking, savings) was all I needed for a very long time.

I also budgeted and tracked expenses…to the penny in the beginning when money was tight.

 

[afan]

Good advice about dangers of overdraft protection.
Also should have another name on account that is P.O.D payable on death so funds can be transferred legally.

Also pay attention to monthly service charge fees.
My son , not married, still has high school checking & savings in small town with his sister named on account… It’s small local so no free ATM in Orlando area…
If he closes those accounts after 20 years…Will it affect his credit scores?
Thanks for assistance . They recently started charging a monthly fee , want to close but credit score ??? Question.

Checking accounts don't report to your credit report, it won't affect anything.

 

[tvguy]

Also should have another name on account that is P.O.D payable on death so funds can be transferred legally.

Isn't a Trust a better option and a POD?

 

[titojackson84]

I’ve always had the standard savings and checking. In 2016, I opened a second savings account and called it “vacation.” I had an automatic transfer set up each pay day for $X. Any normal financial decisions, like rent, groceries, self indulgences would be made based off the regular savings/checking but if something big came up like an unexpected car/medical bill, I could still get money from the vacation account.

When it came time to pay for a trip, I would just transfer the money to the checking account and pay the bill. I always treat the vacation account like found money. Like when you reach into your pocket and find money you didn’t know you had.

 

[DisneyTexan]

Isn't a Trust a better option and a POD?

A trust isn't necessary for what I'm assuming are minimal assets and liabilities. POD (Pay On Death) is exactly what it sounds like...if the account owner dies, the person who is named for POD receives the money.

 

[tvguy]

A trust isn't necessary for what I'm assuming are minimal assets and liabilities. POD (Pay On Death) is exactly what it sounds like...if the account owner dies, the person who is named for POD receives the money.

Yeah, in looking that up it appears the recommendation is for a Trust instead. Doesn't say anything about asset value.

 

[DisneyTexan]

Yeah, in looking that up it appears the recommendation is for a Trust instead. Doesn't say anything about asset value.

I'm not sure what you are getting at. Are you saying that a young adult should spend thousands for dollars in attorney fees to set up a trust, in order to cover the remote chance for distribution of a few thousand dollars that are in bank accounts?

 

[tvguy]

I'm not sure what you are getting at. Are you saying that a young adult should spend thousands for dollars in attorney fees to set up a trust, in order to cover the remote chance for distribution of a few thousand dollars that are in bank accounts?

A simple trust should not cost thousands of dollars. And yes, I am suggesting everyone with assets should consider a trust. It makes thinks so much simpler.
However, POD is actually a trust under the law, just a very limited one. They are known as a Trotten trust. https://www.metlife.com/stories/legal/totten-trust/

 

[DisneyTexan]

A simple trust should not cost thousands of dollars. And yes, I am suggesting everyone with assets should consider a trust. It makes thinks so much simpler.
However, POD is actually a trust under the law, just a very limited one. They are known as a Trotten trust. https://www.metlife.com/stories/legal/totten-trust/

I think let's just agree to disagree on the topic of whether a trust is needed in this situation.

 

[tvguy]

I think let's just agree to disagree on the topic of whether a trust is needed in this situation.

Not saying it's needed, but that it should be considered because of it's long term benefits.

 

[barkley]

Isn't a Trust a better option and a POD?

A simple trust should not cost thousands of dollars. And yes, I am suggesting everyone with assets should consider a trust. It makes thinks so much simpler.

i was the executor of a will as well as the trustee of trust-both in california, both occuring within the course of the same individual calendar year.

a trust is fine IF the decedent follows the law and sets everything up within it. that means not chasing c.d. rates and moving from one bank to another absent their trust paperwork, making sure all their other assetts pass to the trust (life insurance, vehicles...), not promising or physicaly gifting monies, momentos.... after the establishment of the trust. in california it helps avoid probate which can be costly due to the attorney percentage cost laws. in other states a straight forward will can be much less costly b/c if it's done well it's few hours of legal assistance (if any) at an hourly rate (no percentage cost laws).

in both cases if there are pod's on bank accounts they avoid probate or other legal entanglements and it's easy to deal with-each named person goes to the bank, provides proof of primary account holder's death, thier individual identity and gets their share. it's one less thing to deal with for the thankless, blame laden, resented and in my experiences-life threatening 'honor' of being an executor/trustee (entirely non unique according to multiple attorneys and law enforcement athorities in 3 separte states).

 

[tvguy]

i was the executor of a will as well as the trustee of trust-both in california, both occuring within the course of the same individual calendar year.

a trust is fine IF the decedent follows the law and sets everything up within it. that means not chasing c.d. rates and moving from one bank to another absent their trust paperwork, making sure all their other assetts pass to the trust (life insurance, vehicles...), not promising or physicaly gifting monies, momentos.... after the establishment of the trust. in california it helps avoid probate which can be costly due to the attorney percentage cost laws. in other states a straight forward will can be much less costly b/c if it's done well it's few hours of legal assistance (if any) at an hourly rate (no percentage cost laws).

in both cases if there are pod's on bank accounts they avoid probate or other legal entanglements and it's easy to deal with-each named person goes to the bank, provides proof of primary account holder's death, thier individual identity and gets their share. it's one less thing to deal with for the thankless, blame laden, resented and in my experiences-life threatening 'honor' of being an executor/trustee (entirely non unique according to multiple attorneys and law enforcement athorities in 3 separte states).

I did the same with my mom's estate. The Trust was set up specifically to avoid Probate 38 years before . Other than notifying Social Security, her pension plan administrator, and her Life Insurance company, nothing had to be done to settle the estate. It work like a charm.

 

[barkley]

I did the same with my mom's estate. The Trust was set up specifically to avoid Probate 38 years before . Other than notifying Social Security, her pension plan administrator, and her Life Insurance company, nothing had to be done to settle the estate. It work like a charm.

were you the only beneficiary or at least any other beneficiaries were stable, reasonable individuals? makes a world of difference in dealing with a trust. also a revocable vs. a non is a whole different animal to deal with.

 

[NYCgrrl]

I think opening a multitude of bank accts complicates your financial situ, possibly sets you up for failure and makes it harder to keep track of all your funds.
Starting out I think the average person is fine with a checking account and at most two savings accounts.

I‘m not convinced that a debate about the various types of trusts is needed in a discussion about a young adult’s opening financial needs; too complicated yet still important info for a different thread.

 

[tvguy]

were you the only beneficiary or at least any other beneficiaries were stable, reasonable individuals? makes a world of difference in dealing with a trust. also a revocable vs. a non is a whole different animal to deal with.

Only beneficiary. But a trust can be structured to avoid Probate and try and prevent drama. Having the specific wishes in the trust solves a lot of problems. My wife's stepmother only had a Will, and her oldest stepsister is the executor. Almost two years later, nothing has been done to settle the estate. But a trust would not have helped speed things I suspect is the executor isn't ready to settle the estate.

 

[QueenIsabella]

I think opening a multitude of bank accts complicates your financial situ, possibly sets you up for failure and makes it harder to keep track of all your funds.
Starting out I think the average person is fine with a checking account and at most two savings accounts.

I‘m not convinced that a debate about the various types of trusts is needed in a discussion about a young adult’s opening financial needs; too complicated yet still important info for a different thread.

Agreed. I can see starting with a checking and one savings. Maybe adding a second savings for emergencies, when you have enough put aside to keep it separate, if the individual wants that for whatever reason. My kids just have one of each, and manage virtually all of their banking by phone. In fact, about 6 months ago, my DD20 needed cash for something, and I suggested she hit an ATM. She said, "You can get money out of those?"

 

[DisneyHardin]

I think for a young person, one checking and one savings is all that is needed.