Choosing HOA bank accounts

Two accounts, not one

Most associations run at least two accounts: an operating account for the money that pays this month's landscaping, insurance, and utility bills, and a reserve account for money set aside to replace a roof, repave a lot, or repaint the buildings years from now. Keeping them apart is less about the bank and more about not spending tomorrow's roof money on today's mulch. See Operating accounts and Reserve accounts for what each one is for and how it gets funded.

Some boards add a money market account, a certificate of deposit, or Treasury bills to earn more on reserve balances that will not be touched for years. Money-market accounts, CDs, and Treasury products walk through the tradeoffs between the three.

Only $250,000 is federally insured, per bank

Every dollar the association keeps at a bank is protected by federal deposit insurance only up to a point. The FDIC treats the association as a single depositor and adds together everything it holds at that one bank, checking, savings, money market deposit accounts, and CDs, toward one ceiling.

"The standard maximum deposit insurance amount is $250,000 per depositor, per insured bank, for each account ownership category."

Source: Your Insured Deposits, FDIC

Adding more board members as signers does not raise that number, and neither does opening a second account of a different type at the same bank. If reserves are approaching the cap, a deposit-placement service can spread the balance across a network of banks while the association keeps one banking relationship, and Treasury bills carry no cap at all because they are backed by the federal government rather than deposit insurance. See FDIC coverage for how the cap is calculated and Treasury products for the alternative.

Build in controls before you need them

An account is only as safe as the people who can move money out of it. A single volunteer treasurer who writes checks, deposits cash, and reconciles the statement alone controls the whole transaction, start to finish, no matter how trustworthy that person is. The fix is splitting those jobs among different people and requiring a second signature above a set dollar amount, ideally with the bank statement landing in a board member's inbox before the treasurer ever sees it.

Exactly how many signers your association needs, and what dollar threshold triggers a second signature, is set by your own bylaws and your bank's account rules, not by any general standard. Some states also legislate directly on this; check your own state's statute alongside your governing documents. See Who should be a signer?, Dual approvals, and Separating duties for how to set this up.