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Comment by mstade | Hacker News Reader

And this right here is why you should have accounts with at least three separate banks, ideally in at least two different countries, and emergency funds in all of them. Also – get a couple of credit cards! Even if you never use the credit beyond what's necessary to keep it, it's good to have for when the proverbial shit hits the fan. Cash is also useful for solving the basic needs like getting food, but for paying bills it tends to be less so, since it's increasingly a pain to bay bills by cash these days. The move to cashless is unfortunately going faster than a feature parity alternative is being developed and crucially, adopted.

As with almost anything financial, the key to lower risk is not putting all the eggs in a single basket.

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Unfortunately, the people who are likely to be most negatively impacted by an incident like this (relatively smaller amounts taken across a large number of accounts) are not in the position to have multiple bank accounts. Someone who is living paycheck to paycheck needs to aggregate all of their funds in one bank account in order to write a check for rent, and to avoid excessive non-sufficient fund fees.

Agreed that this is sage advice for anyone who is able to financially have multiple accounts though.

Unfortunately, you're right. :o(

Thing is, you don't even have to have a whole lot of money to set up multiple accounts. I started doing this when I was still a student, because I got freaked out by how easy it was to skim cards back in the dizzy. (Maybe it still is, but in the EU most cards seem to smart cards these days so you can't just do the swipe skim anymore – at least, I don't think so.)

I had four accounts:

- A: current account, where I would receive whatever little money I'd make on the side every once in a while, and benefits

- B: savings account, where I'd move most money I received in account A; this account had full freedom but pretty much no meaningful interest

- C: second savings account, where I'd actually put savings; some restrictions but better interest

I also had a mixed debit/credit card connected to A – it had terrible limits (something like £250) but it was enough to make purchases throughout the day. At the end of the day, I'd move funds from B to fill the credit back up, thereby never getting any penalties. It's important not to actually use this credit for more than whatever the allotted free time is. (I think I had 30 days free credit, but always paid it back immediately anyway.) A almost never had any money on it, and if I needed to make larger purchases than the credit allowed I'd just transfer it when I needed it. This setup worked well, and I had a couple of scares where my card had to be blocked, but I never lost money. My savings were abysmal (living hand to mouth) and it was the same funds moving around all the time – I just made sure that my exposure on the card was almost always the bank's money. They're pretty quick in settling things when shit hits the fan then.

This setup breaks down if someone manages to hack the bank or you though, since it's all in the same bank. This is why I use multiple banks today.

Obviously mileage varies by country, but my experience with banks in the EU is that once you've got an account, they're more than happy to set up more stuff for you. (Ye olde Wells Fargo trap, I s'pose.)

Most banks like to insist that you use them exclusively, but I've never heeded that advice and so far I've never had a problem with it. If anything, they seem to work (ever so slightly) harder to get all of your business.

OK while I am a big fan of multiple bank accounts (I have three, all for different purposes) this advice is total overkill and inappropriate for anyone who isn't financially stable, which unfortunately, is half of Americans. Two different countries? No thanks, I'm not screwing with that nightmare. I'd like to keep my money in the form of US dollars, I have no need for foreign currency and I don't want to waste money converting to and from different currencies. Most people that I know lack the discipline to manage multiple accounts at multiple institutions.

Credit cards are great for some but inappropriate for others who lack discipline or funds. Keep in mind you spend more when using plastic over cash as well. [1]

No advice is one sized fits all.

[1] https://www.nerdwallet.com/blog/credit-cards/credit-cards-ma...

Perhaps the suggestion was made from an European standpoint? Two accounts in Euros within the SEPA area [1] means no costs for currency conversions or bank transfers between your accounts.

[1] https://en.wikipedia.org/wiki/Single_Euro_Payments_Area

Even so, the vast, vast majority of Europeans have income and expenses in a single currency, in a single country.

If they don't, then within the Eurozone they still don't necessarily need two accounts. It might be convenient, if it enables using local systems to pay utility bills on two properties, for example.

If currencies are being changed, SEPA doesn't help.

Well, the bank in question holds GBPs, converting to/from Euros to GBPs seems incredibly inconvenient and has no real benefits. Most people get their wage in a single currency and use a single currency in their every day lives.

I have a family member who gets their pension in Canadian dollars but lives in the US. Since he lives in the US he has no need for Canadian dollars. He says that his money loses a quarter of its value converting from Canadian dollars to US dollars. I don't know if that's true, its what he told me.

Most banks I've ever done business in the EU with will let you keep a currency account, in select currencies. Having two (or more) accounts in different countries is not particularly difficult then, it's just like having a different bank account. There are usually no capital requirements either, although there may be an annual (but small) charge, and you may have to all and actually talk to someone to get it set up since it's usually not self service.

That's because the exchange rate has gone down - not from frictional transaction costs. The worst ripoff forex fees are in the 1% range. You can do much better if you look.

Further it's relatively easy to keep USD in a Canadian bank account if you want to.

I wouldn't recommend that for the average individual (who, unlike most of the readers on this site, don't have a lot of disposable cash in savings anyways) - at least from a tax filing perspective. At the very least you're going to have to start filing an FBAR annually, and (depending on tax treaties) have deal with withholding credits. That all aside, there's the currency-conversion hassle, and the fees associated with moving cash internationally.

I should have mentioned I'm in the EU, and the single market makes this a lot simpler – apologies.

Ah. My bad - yes, I replied from a North-American-centric perspective. I have no knowledge of the EU, and can only assume that the common market would make things simpler (though I wonder if the banks there are really independent of each other, and shocks in each others' home economies.)

> ideally in at least two different countries

Is it generally easy to open accounts in countries you are not resident in?

It depends on your country, and the country you're looking at.

If you are an American, be aware that merely having a bank account in a foreign country will make your life a lot more complicated at tax time. It's probably not worth the pain, unless you have a specific need.

It's not so bad, actually; you have to file FBAR, which will take you a couple of hours, but that's about it.

It only takes me a couple hours to do my taxes in the first place.

Actually some Uk /Euro banks wont take American customers to avoid the extra costs the IRS insists on.

Yes. You can open a bank account in Estonia online, without ever going to that country.

https://1office.co/estonia/blog/opening-estonian-bank-accoun...

You actually mean no -- Estonia making it easier is exceptional, and only happened in June.

For example, I considered opening this Tesco account, since I need to keep about £1500 in my British account for student loan payments. Tesco offer 3% interest on the balance, but I should have opened the account before I emigrated.

I'm an Australian expat in The Netherlands with accounts in AU, here in NL, and an additional account I had setup in the US.

Both the NL (even when has temp residency / work visa) and the US account were a major PITA to create.

Yeah, my accounts in the US always get flagged for manual review at creation time and "extended initial funds holding" because my SSN doesn't match my DOB (because it was issued when I got my Green Card, and not when I was born).

I've even had to convince banks that they're allowed to open an account for me in the first place...

Right, I'm in the EU and and EU citizen to boot, so that's probably why it's been easier for me. Funnily enough, the UK has been the most difficult country to open a bank account in, because of their insisting on using utility bills as proof of residence, and apparently a residence is more or less a must. My first UK account took a few days of hassling to get set up, because I didn't yet have a residence, but was living in a hotel. A proof of employment and a couple of face to face meetings with supervisors cleared that up though.

If you're in the EU (and a citizen of an EU country) it's not particularly difficult I've found.

Thanks Dad. You realize that for every single bad thing that happens there are always additional steps that could have been taken to prevent it? Unfortunately there is a trade-off most people make between living their life and prepping for the end times.

I'd rather keep my money in one place - if you've got 3 accounts in separate banks that means 3 accounts to pay attention to to make sure nothing is going out that shouldn't and also multiplies the risk factor?

Yup. As long as youre under the limit underwritten by the government it's not a problem.

Unless that insurance policy pays off within hours of your money being gone, it absolutely is a problem.

So the risk of something happening is larger (but not quite 3x due to shared vulnerability and multiple event), however is risk of being locked and unable to function is significantly smaller as long as you can operate with the subset of accounts.

If you are in the position (like most) where all your account contents are guaranteed and the only thing you are hedging on is convenience vs risk of cashflow problems.

I keep a lot of money in cryptocurrency in my cold wallets. Those can't be seized, no run on the banks there, and thus far the appreciation has been great.

Your cryptocoins can be tainted by a government though.

That is, the addresses can be published by whatever entity with a threat to taint addresses they send value too unless the target addresses turn the value over to the government entity.

If the threat environment involves a Government vs. You, anything that is not physical currency is dead.

They can freeze your bank accounts too.

I replied to a comment stating that cryptocoins can't be seized. My point was that they really don't offer much of an advantage over bank accounts in that respect, not that they were more flawed...

That creates a light-cone of taint, and really gambles on a big enough portion of the economy caring about taint.

Also, hard to taint coins you don't realize exist. Not that I have any of those, mine are all from exchanges, but miners could easily have backup coins, as could OTC traders

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