Just make sure every account you have has no fees, earns interest – and don’t forget to check your statements!

Simply push (via online billpay) a small deposit from your main account to your backup account(s) once or twice a year to ensure they don’t go inactive.

I never close old accounts – opening a new account almost requires giving a DNA sample nowadays.

If there is a dispute of some kind they could actually withdraw an amount they think you owe.

For example a contracted travelling nurse who is provided with housing and a travel allowance could be charged for monies owed and it could be taken out of her checking account, no matter who broke the contract. In a situation such as this a backup checking account would be an absolute necessity for a contractual employee.

A shorter period of inactivity results in a freeze on the account that takes some paperwork (usually) to get removed.

Talk to your bank(s) and check the fine print before “forgetting” about these accounts until you need them …

That way if your account number gets stolen, it is only the “backup” account, which hopefully has very little money in it.

It works well for us!

You absolutely NEED a secondary checking account with a DIFFERENT bank (BRICK AND MORTAR BANK WITH REAL PEOPLE), You also need an ATM card to go with the checking account.

My primary checking account was compromised earlier this year by thieves who printed up phony payroll checks with my bank routing and checking account numbers, and cashed them at WalMart using phony drivers licenses.

You cannot imagine the huge hassle it was to get everything straightened out and get my money credited back to my checking account.

I had to file fraud affidavits in person with the bank when this happened, file police reports, file identity theft reports, and notify credit bureaus.

Fortunately, I caught the fraud the day the checks hit my account, nothing bounced because I had enough money in the account, AND I had a secondary checking account with sufficient funds to provide living expenses for two months.

The secondary checking account (and money market account) are part of my emergency fund. The secondary checking account is a free interest-bearing account, so no fees, I get interest added to the account every month. I make sure to have a few transactions a year (the interest doesn’t count when considering an account dormant), so the state doesn’t try to grab the account as inactive. Often, the transacation is a deposit of the proceeds of the loose change I’ve just tallied up in their free coin-counting machine.

I only had the checking account compromised, none of my other accounts with this bank were hit. The rationale for having the secondary accounts at a different bank is as contingency in the event that ALL accounts at a particular institution are compromised. I have secondary checking, money market, ATM card, and credit card with a separate bank.

I had to open a new checking account and wait for new checks (and NO, they don’t give starter checks anymore).

The old checking account had to remain open but blocked until all the pending transactions cleared. Every day I had to verify and give authorization to the bank to pay whatever came in.

Also part of the royal pain was having to stop all the automatic fund transfers to/from the old account and get them started up in the new account. Mutual funds, direct payroll deposit, Y membership, Paypal, you name it. I found out that direct payroll deposit can only go into a checking account, not a savings account (money market is considered a savings account). Same thing for mutual fund ACH transfers.

Getting all the mutual fund automatic transfers started up again required a Medallion Signature Guarantee (also done in person at a brick-and-mortar bank) because there was fraud on my checking account.

It took two weeks for the funds to be restored to my checking account. I was told that two weeks was a short turnaround for the bank’s investigation, because the checks were clearly fraudulent. I was told that if someone had stolen checks from my checkbook and forged my name to them (or had altered a check’s dollar amount), it could take months to get my money back, because now that banks no longer have to return the physical check to customers, they really don’t have physical evidence other than the image of the check to investigate. And guess what, the bank isn’t REQUIRED to restore the funds if they feel their investigation indicates that you are trying to defraud the bank. Good luck trying to straighten that out.

So, the moral of the story is to always have a set of secondary accounts at a financial institution separate from your primary accounts. The more complete you can make the secondary set of accounts (checking, money market, credit card, CDs), the better, but at a minimum you need a checking account with ATM card.

End of story.

I do like the idea of having a backup account, so we have our regular checkings and savings at our neighborhood bank, and also an online savings account not to be touched except for emergency.

Disadvantages:

1. Now you have money in an emergency fund doing almost nothing for you as far as earning interest (I will admit I am not a supporter of emergency funds if I still have debt), and you have money in a “hidden” checking account doing nothing for you.

2. By hiding the check book is it really an emergency fund? I would think you would want quick access to a fund like this, ie. hide a check in your glovebox so you can at least access it in a pinch. If it is hidden at home it just doesn’t seem useful.

3. The possible bank charges have been mentioned.

Advantages

I really can’t think of any. I would see hiding $200 in cash somewhere my house as more useful than a hidden check. Some stores don’t take personal checks, but they all take cash (in Canada I can’t think of any stores that take personal checks anymore other than in a small town).

The site is great, but I might rethink this one.

I resurrected an “abandoned” high school checking account as my emergency fund about a year ago (it’s with my mom’s credit union; she had been keeping online tabs on it in the interim).

I direct-deposit $100/paycheck into it, and pretend the money doesn’t exist (not very much since I’m concurrently debt-snowballing against credit cards and student loans as well as funding a 401k). When that account hits a magic number, my emergency fund is complete! I may continue feeding it beyond that point (in order to roll some into CDs), but in the meantime it’s reassuring to know it’s there. I don’t have checks attached to it at the moment, just an emergency-only debit card.

I used to do a lot at eBay, but then someone hacked into my PayPal account, which was attached to my regular checking account. I ended up getting it all straightened out, but it could have been disastrous.