Bank accounts for high networth individuals are not so different from ordinary ones in principle, but the details change when balances are large. The main issues are how much of your cash is insured, what interest you are earning, and what extra services come with a relationship. Here is a plain guide to the main options.
The biggest issue: deposit insurance limits
In the United States, the Federal Deposit Insurance Corporation insures deposits up to 250,000 dollars per depositor, per insured bank, per ownership category. A person with several million dollars in cash can easily go above that at one bank. You can check the rules and use the FDIC’s calculator at FDIC.gov.
Ways wealthy savers handle it:
- Spread cash across several banks.
- Use different ownership categories, such as individual, joint and certain trust accounts, each with its own coverage.
- Use a deposit placement network, where one bank splits your money among many banks so that all of it is insured.
- Hold Treasury bills or money market funds, which are not bank deposits but have their own safety features.
Check current details before you rely on any of these methods, as rules and products change.
Types of accounts
Private bank accounts
Large banks offer a personal banker, lending, trust services and investment access to clients who meet a minimum, such as a million dollars or more in assets with the bank. Fees can be high, and the benefits depend on what you use.
High-yield savings and money market accounts
Online banks often offer higher interest than branch-based banks, and they may have no minimums. For large cash balances, it is worth comparing rates every few months.
Premium checking accounts
Some banks waive fees and add perks, such as free wires, concierge services or higher withdrawal limits, for clients with large balances.
Certificates of deposit
CDs lock in a rate for a set term. A ladder of CDs with different maturities spreads out the dates when you can access cash.
Trust and business accounts
If you hold assets in a trust or company, the account must be set up in that name, and legal documents are needed. Coverage rules for these accounts can be complex.
What to look for
1. Insurance coverage and how much of your balance is protected.
2. Interest rate, compared with other options.
3. Fees, including wire fees, minimum balance fees and foreign transaction fees.
4. Liquidity, meaning how quickly you can access money.
5. Service, such as a named contact who knows your situation.
6. Digital security, including strong authentication and alerts.
Think about purpose
A sensible approach divides money by use. Keep a buffer of several months of expenses in an easy-access account. Place money for known costs in the next year, such as taxes, in a high-yield account or Treasury bills. Put longer-term money in investments suited to your goals, not in cash.
Cross-border questions
If you live or earn in more than one country, you may need accounts in several. US citizens with foreign accounts above certain levels must file reports with the government, and other countries have their own rules. Speak to a tax professional before moving money abroad.
Safety habits that matter more with more money
- Use two-factor authentication on every account.
- Set alerts for large transfers.
- Confirm wire instructions by phone, using a number you already trust, since wire fraud is a common risk.
- Keep contact details up to date with your bank.
Questions people ask
Is private banking worth it?
It can be, if you use the lending, planning and investment services. If you only need a place to hold cash, a simple high-yield account may serve you better at lower cost.
Can I have too much in one bank?
Above the insured limit, your money is at risk if the bank fails, although history shows that depositors above the limit are not always left with losses. Still, it is prudent not to assume that.
Are credit unions an option?
Yes. The National Credit Union Administration insures deposits at federal credit unions up to similar limits.
Takeaway
For bank accounts for high networth individuals, the practical tests are insurance, interest, fees and service. Review your setup once a year, and keep emergency cash separate from long-term investments.
This article is general information, not financial advice.
Related reading: Best Money Managers for High Networth Individuals: What to Check.
