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Linking Bank Accounts: A Guide

Linking Bank Accounts: A Guide
Chris Alexis
Chris AlexisUpdated March 31, 2023
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
If you have more than one bank account, such as a checking account and a savings account or money market account, you can typically link those accounts — even if they are at different financial institutions. Linking your bank accounts makes it easier to move funds between them. If you have extra money sitting in your checking account, for example, you can easily move it to savings, where it can earn a higher annual percentage yield (APY). If, on the other hand, you have an emergency expense, you can quickly transfer money from savings into checking to cover it. You can also link a bank account to a third party payment app like Venmo or Paypal.If you’re wondering how to link bank accounts and, perhaps more importantly, if linking bank accounts is safe, read on. Here’s what you need to know about linked bank accounts.

What Are Linked Bank Accounts?

A linked bank account is an account that is electronically connected to another account. This could be a checking account that's linked to a savings account, or it could be a bank account that's linked to a payment app.While the two accounts remain separate accounts, linking them makes it possible to conduct transactions between them electronically. If your linked checking and savings accounts are at the same bank, transferring money between them typically happens right away. If the linked accounts are at two different banks, the transfer may take a day or two to complete.

How to Link Bank Accounts

If you have more than one account at the same bank, the bank will often automatically link these accounts for you. If you want to link a bank account to an external bank account, you’ll need to log into your account and go through several steps to “add an external account.” The link may not be immediate, however. The bank may send a few test transfers to the external account to make sure the linked account is legitimate. After that, though, the accounts will be linked and making transfers between them will be easy. 

How to Link Bank Accounts From the Same Bank

If you have two accounts at the same bank, such as a checking and a savings account, the accounts are typically automatically linked so that you can easily pull money from one and deposit it into the other online. When internal accounts are linked, you usually get one statement that provides information for both accounts. You may also be able to use your savings accounts as a backup to your checking account. This is a feature called overdraft protection and, if you opt in, the bank will automatically pull money from your savings account if you accidentally overdraft your checking account. Often, there is no charge for the transfer.If you have a checking account and a savings account at the same bank that aren’t linked, you can reach out to the bank and ask if they can link the accounts.

How to Link Bank Accounts From Different Banks

If you have a checking account at one bank and a savings account at another bank, say an online bank, you’ll likely want to link them to make it easy to transfer money between them. You can often do this when you first open the savings account (in order to fund the new account), but you can also do it later.To link an external account, you’ll need to first gather some information about the external account, including the account and routing numbers and your personal login information.Next, you’ll need to log into your bank’s website or mobile app and look for an option in the dashboard or settings that says something like “Link external account” or “Add external account.” In some cases, you may need to click something like “Make a Transfer” and then “Add a New Account.”You’ll then be asked to provide information about the external account. Some banks will ask you to actually log in to that account.To verify that the link was set up correctly, the bank will typically make several tiny “trial deposits” to the newly linked account. You’ll need to log into your external account within a few days to find these deposits. When you see them, log back into your original bank account and verify how much the deposits were for. If the amounts are a match, the link is verified. The deposits will likely be reversed soon after they’re made. To link your checking account to a third-party payment service, such as PayPal or Venmo, the process is generally the same. You’ll need to give the app the routing and account numbers for the bank account you want to link to the app. This is the account money will be pulled from when you make a payment using the app.You may also be able to link a bank account to other types of accounts (such as a brokerage account), but the process may be slightly different. When linking an account that is not a bank account, you might have to use a special form, which is often provided by the institution that holds your nonbank account.

Pros and Cons of Linking Bank Accounts

Linking bank accounts comes with numerous benefits, as well as a few risks. Here’s a look at the pros and cons. 

Pros of Linked Bank Accounts

  • Linking accounts at the same bank allows you to get a consolidated statement, which provides a bird’s eye view of your banking information.
  • Some banks offer incentives to link your accounts, such as free overdraft protection and/or no monthly fees.
  • It makes it easier to make transfers between banks, and you won’t have to pay for a wire transfer fee.
  • It allows you to automate your savings by setting up a recurring monthly transfer from your checking account to your savings account.

Cons of Linked Bank Accounts

  • Depending on the bank, linking internal bank accounts and signing up for overdraft protection could result in overdraft fees.
  • Third-party apps may not have the same built-in security features (such as multi-factor authentication) that banks have. 
  • Giving your bank information to a third party app could potentially leave it vulnerable to a data breach.

Is It Safe to Link Bank Accounts?

Generally, yes. Banks and credit unions typically use the latest cybersecurity technology to secure online transactions. These measures often include: a transport security layer (this encrypts data that’s sent over the internet), tokenization (this converts data into tokens to hide sensitive information), and multi-factor authentication (which requires you to verify your identity through multiple channels).Reputable payment apps also usually come with security features, as well as guaranteed protection for unauthorized transactions.

The Takeaway

Linking bank accounts is a useful tool that allows you to easily move funds between your accounts. It’s common to have linked accounts when the accounts are at the same bank. But you can also link accounts that are held at different institutions. That’s good news because it means you’re not necessarily limited to opening a savings account at the same bank that holds your checking account. If you’re looking to get the best rate on your savings, it often pays to shop around. With Lantern by SoFi’s online banking marketplace, it’s fast and easy to compare high-yield savings accounts based on APY, fees, and balance minimums. Lantern can help you compare online savings accounts and find today’s best rate.

Frequently Asked Questions

Is it a good idea to link bank accounts?
What does it mean to link two bank accounts?
Does linking your bank account affect credit score?
Photo credit: iStock/FG Trade

About the Author

Chris Alexis

Chris Alexis

Chris Alexis has been putting pen to paper and fingertips to keyboard since his youth. He ultimately grew into an accomplished and award-winning writer who loves using the power of language to connect with audiences. He also strongly enjoys learning about who he is writing for so he can create something that will truly resonate with them. He has worked for a variety of companies, each of which have given him more experience and insight.
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