Separating financial accounts between institutions

I've had this strong idea for a while that it makes a lot of sense to keep your key financial accounts (checking account, savings account, investment account, credit cards, etc) at separate companies. My theory has been that the more we become dependent on one specific company, the more at risk we are for mistakes to seriously affect us - and if you want to be pessimistic - the more are risk we are for the financial institution to freeze your money, and as you may agree, it would make it very difficult to maintain a normal life without any money.

Of course, I've had those thoughts for years and have always followed my own advice, but without any actual proof that it was anything other than being paranoid. Well, I feel slightly validated with some recent experiences Troy and I have had with American Express.

A few weeks ago, Troy had an Amex transaction declined. He called Amex to see if there was a problem, and they basically told him that his account was under a security review and they had frozen all transactions on his British Airways American Express card (BA Amex). When they had an update, they would send a letter to the house with details. He spoke with them at length and finally spoke with a supervisor in the security department of Amex, and they just wouldn't say anything more than "can't talk about it, you'll understand when we send you a letter." It's been a few weeks and we haven't seen anything yet, other than Troy's BA Amex card still doesn't work.

On Saturday morning, I went to use my Amex card and it was denied. I called Amex in a bit of a frenzy because I was leaving for a work trip in a few hours. My Amex card had also been frozen by Amex security, and the only hint I could get was that it was somehow related to Troy's freeze. The cards are unrelated, but we both obviously have the same mailing address. They asked me whether I shared a house with someone and when I said yes, they hinted that it was somehow related to that. Since it was a Saturday, there was no one in the security department at Amex to speak with, so they said to call back on Monday. I did that, and security said pretty much the same thing as they had to Troy - sorry for the hassle, but we have an active investigation going on, won't talk to you about it, you'll receive a letter in the post from us when we're done, have no idea how long it will take, and we've frozen all your American Express accounts until then. Hope you have another credit card you can use.

It struck me that while this affected only our American Express accounts, something similar could in theory happen with any of our financial accouts. What if the bank decided something fishy was going on, and froze access to our accounts? What if we had a financial dispute with a bill and the bank issuing the credit card happened to be the same bank we had our savings in? Would they just take our money since they could?

So, I feel slightly validated that we have an Amex card, a Mastercard, a checking account, a savings account, and a stock account - and they're all at separate financial companies. Although I'm intrigued by what American Express is investigating, the reality is that it's hugely frustrating, a bit scary, and quite inconvenient. It had been my primary credit card, and after this experience, I probably will cancel it and file a formal complaint. I'm all for making sure everything is legit, but in neither my nor Troy's case did Amex bother to contact us, write a letter with details, or give any information that could help us understand what's going on.

Morale of the story? Don't use Amex, and keep your financial accounts separated so that if something goes wrong with one, you still have access to money. I'll post an update once this is resolved! (That is, if I'm not hauled off to jail and thrown in prison in some mistaken identity case. Ha. That's funny. I think.)

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