What are the advantages of keeping money using two different banks instead of one?

Advantages: if one bank has a problem (e.g. network probs) or if you have a problem at one bank (e.g. identity theft), you can go to the other bank to get $.

Disadvantages: more paperwork. If there are balance incentives, you need to keep those amounts of $ in both banks, both of which likely pay low interest.

Other advantages: You can immediately deposit or cash a check drawn on a bank that you have an account at yourself, without a hold. You can use different accounts for different types of activity. You can use an account you don’t depend on with an organization you don’t especially trust. Or you can use an account for business transactions, or the funds for some group whose money you manage but that isn’t entirely yours. Or you can use an account for some particular purpose that makes sense to you.

Other disadvantages: Some banks charge fees for checking accounts, or change their policies from time to time to steal nuisance fees from people, or close accounts which don’t have some level of activity within a certain period of time, which may require attention to sort out from time to time. Some bullying organizations may require you to report all your accounts, which will give you more paperwork to do. You get regular communications from each of them.

Given the bank failures of the last recession, I decided to put my money in a variety of banks, primarily for insurance / FDIC purposes.

I have one main account (at Chase, since you asked), but my savings is spread across 3–4 banks all with full FDIC coverage (or Credit Union coverage).

Yes, it is more paperwork. But so what. It is safer.

Advantage: If you get irritated with Bank A,, you can grumble off to Bank B with little hassle.

It’s a kind of insurance. My late husband once worked for a Silicon Valley startup company that failed. Their final paycheck bounced right after we’d drawn on it and paid a bunch of bills. The bank charged us overdraft fees on every bad check we’d written. They froze our account. That’s when I went across the street and opened an account with an unrelated bank, and I sent my paychecks there so we couldn’t get hit that way again.

Now I keep one of those accounts going for active income and expenses and the other one mostly in reserve. I also have some securities with another institution. It’s a bit more cumbersome, and I do have a lot of things to track, but it’s worth it for knowing there’s always a Plan B.

@Jeruba – that’s essentially our strategy too: one account for day to day, one for reserve.