A Tale of Two Banks

Keeping two bank accounts is a key part of your money plan. One account you use to deposit paychecks. The other is your everyday account you’ll use to pay expenses. Your plan works if your paycheck account is difficult to reach and the expense account is accessible and easy to operate.What should you look for in a bank? How do you open these accounts?

Maybe you’ve seen Clint Eastwood’s 1966 film The Good, The Bad and the Ugly. Unfortunately, banks generally skip the good, and your choices are between bad and ugly. Still, customer service has become a bigger focus as Congress has forced banks to discontinue outrageous fees for ATM overdrafts and to clearly state terms on credit statements. Banking has a long way to go, but I’ll admit it’s much better than six months ago.

To find the right bank account, don’t rely on what the account executive offers. They don’t know your goals. Here’s a list of questions you should ask to ensure you’ll open the right account for your plan:


  • How many branches do you have? The correct bank will answer, “many branches in areas you travel.” You need to easily access money from this account. If an emergency arises, you don’t need to scour the city for a branch.
  • How many ATM machines can I use? The right answer will be “tons.” An even better answer is “we cover other bank’s ATM fees.” Most banks don’t.
  • Is your ATM card VISA or MasterCard imprinted? You want a “yes.” ATM transactions are becoming the heart of most transactions, so you’ll want as much flexibility as possible.
  • Can I pay bills online? They should answer “we have a fantastic online banking site.” If you like using the internet for banking, visit bank websites and compare layouts and online banking features.
  • What fees will I pay? If the answer isn’t “none,” leave. Most banks have accounts offering free checking. You may pay for new checks each time, but avoid accounts with monthly maintenance costs.
  • Can I get overdraft protection? Now obviously I’m not suggesting that you bounce checks. Abusing this feature can cost you quite a bit of money. However, overdraft protection can also save on large bank and retailer fees that can occur if a payment is declined.


  • Does your account pay interest? The answer should be “yes.” This account is designed to hold emergency reserves, so you should earn interest on this account.
  • Are there account fees? If the answer is “yes,” leave. Finding an interest-bearing account might require a minimum balance, so you’ll either have to open an interest-free account and switch later or find a way to deposit the required minimum.
  • Is moving money systematically to other banks easy? The answer needs to be “yes” for your plan to work. You’re going to link this account to your expense account and create your own “paycheck.”


  • Having these accounts at the same bank. This system is designed for you to keep money, and if you have a history of raiding your emergency fund, having both accounts at the same institution could make it too easy for you to raid your income account.
  • Placing the income account in an easy-to-reach location. The most successful savers I’ve worked with make the income account difficult to reach and the expense account easily accessible. Set up your system to win.
  • ATM cards for the income account. ATM access makes this account too easy to reach. If the money is deposited Monday and comes out Tuesday, you’ve ruined your own system.

Once you’ve established both accounts, always deposit to the paycheck account and let automatic money movement to your expense account dictate how much you spend. That way, you’ll pay bills on time, build an emergency fund, and have funds ready when you experience a slow month or two.

Now you have a money plan, are working it, and have good bank accounts established. Next time we’ll tackle paying down debt!