For many people, having a single checking and savings account is enough to keep funds delineated for their purpose and take advantage of savings perks. For others though, having even more accounts – like a joint spending account and individual spending account, or additional savings accounts for particular goals – can be more beneficial.
Key Insights
The right number of accounts varies – Some people do fine with just a checking and savings account, while others benefit from extra personal or business accounts.
Multiple accounts can boost organization and earnings – Separating everyday spending from savings, tapping higher interest rates, and maximizing FDIC coverage are key benefits.
Good management is essential – Consolidating banks, automating transfers, and labeling each account helps track fees, balances, and requirements.
What Is a ‘Good’ Number of Bank Accounts?
“Although the simplicity of having fewer accounts to track and organize can help to remove the overwhelm that you may feel from your finances and remove the barriers to wealth-building, having some separate and apart accounts can also help you stay on track on your journey,” says Alissa Krasner Maizes, CEO of Amplify My Wealth.
The truth is, the right number of bank accounts is different for every individual. According to Maizes, starting by separating your emergency savings and everyday spending money can help you ensure you have spending money when you need it without the temptation to spend from savings.
Beyond that, however, it depends on how you prefer to organize your funds and the account perks you want to take advantage of.
Personal Bank Accounts
Maizes advises starting with separate emergency funds, fun money and goal-setting accounts.
“Joint and individual accounts for shared and separate money from a spouse or partner may add value to your wealth-building journey,” she explains.
With at least two to three accounts, you can keep saving and spending money separate and take advantage of the different benefits of checking or savings accounts. Separate accounts from a partner can also work in some relationships, allowing you to manage shared expenses together while maintaining your own independent account for personal spending.
You may want to consider additional personal accounts for particular savings goals, like saving for a home down payment or vacation. If you have significant balances, you can often earn higher returns with investment accounts, as well.
Business Bank Accounts
“Having separate accounts rather than co-mingling your personal and business money is vital to a successful wealth-building journey to track each with ease, giving you greater clarity and decreasing the likelihood that you are unknowingly helping one with funds from the other…” says Maizes.
If you have a small business, keeping your business income and expenses in a separate account also makes it easier to file taxes and identify deduction opportunities.
Within your business, you also might opt for separate business checking and savings accounts. Maintaining enough in your checking account for your business’s cash flow is critical, but depositing any idle cash in savings can lead to higher interest returns.
Every good budget separates money intended for everyday expenses like monthly bills and groceries from savings and fun money. Extending that bucketing system to your bank account strategy can make it easier to stay organized.
“At Domain Money, the first thing we do with clients is help them optimize their balance sheet. We make sure each account has a specific purpose and that the proper type of account is being used. This promotes healthy spending and saving habits while also ensuring you are not over complicating your finances with unnecessary accounts,” says Alicija Dearth, CFP® , Financial Planner, Domain Money.
Better interest rates
Checking and savings accounts – as well as other types of bank accounts – have different benefits. Checking accounts are best used for everyday spending, as they offer debit cards for regular transactions and check-writing capability. Savings accounts, meanwhile, don’t usually offer easy spending capability, but usually come with much higher interest rates.
Keeping all your money in a single checking account means you might miss out on competitive APYs. Taking advantage of savings rates can make your money work for you and increase your return. For balances you don’t need to access as often, you can also consider accounts like certificates of deposit (CDs).
Maximized FDIC insurance
“If you have a high level of cash at an FDIC-insured bank, owning multiple accounts can help maximize FDIC protection. The deposit insurance coverage limit is set at $250,000 per depositor, per FDIC-insured bank, per ownership category, said Dearth.
Spreading out large balances can provide peace of mind that your money is secure.
Pros of Multiple Bank Accounts
Money can be bucketed according to its intended use for easier budgeting.
You can take advantage of higher interest rates on savings or CD accounts while keeping other funds accessible for everyday spending.
You can ensure your money is FDIC-protected by spreading balances across multiple accounts to avoid exceeding insurance limits.
Cons of Multiple Bank Accounts
More accounts to keep track of, including associated fees, minimum balances and transaction limits.
Smaller balances may earn lower interest rates on accounts with tiered APYs.
Monthly maintenance fees can add up with too many accounts.
How to Manage Multiple Bank Accounts
While having multiple bank accounts has many benefits, you do have to stay on top of them to ensure you pay any associated fees, maintain minimum balances and meet other requirements. There are several strategies you can take advantage of to make managing multiple accounts easier, though:
Open multiple accounts at the same financial institution. “If possible, avoid having multiple accounts at multiple financial institutions,” explains Dearth. “This will make transactions and fees easier to track. It will also eliminate the need for multiple, unique login IDs and passwords. Your finances can feel complicated enough, there is no need to add to the complexity.”
Automate fund transfers. Most of the best online banks and credit unions allow you to set up automated transfers into your account, which can be particularly useful for making regular savings deposits.
Name your accounts. Most financial institutions will allow you to rename accounts online so that you can clearly see how they should be utilized. ‘Emergency Fund,’ ‘Bahamas,’ ‘White Range Rover,’ ‘Down Payment’.... have some fun with it, says Dearth.
Be transparent if you’re managing money with a partner. Keeping both joint and separate bank accounts can be a useful strategy when managing money with another person, but communication is key. Make sure there are clear expectations for what each account will be used for, who is responsible for ensuring minimum balances are met and who will keep track of statements.
In addition to these tips, doing your research before choosing any bank account can also make managing your money easier.
“Starting your banking journey with an FDIC-insured bank that offers high-yield savings and checking accounts, allows you to open and fund multiple accounts to organize your finances, and does not have fees and minimums is a great place to start,” says Maizes.
By putting in the time to find the best type of account for all of your goals, you can keep fees low, returns high and your financial strategy straightforward.
Frequently Asked Questions
Is It a Good Idea to Have Multiple Bank Accounts?
Yes, it can be a good idea to have multiple bank accounts. At the least, keeping separate checking and savings accounts can promote better savings habits and allow you to access higher interest rates. The decision to open even more accounts will depend on an individual’s financial strategy and priorities.
Should I Split my Savings Between Banks?
In some cases, it may make sense to split savings between multiple accounts or financial institutions. This is the case if you have a balance over $250,000, for example, as that is the deposit insurance coverage limit for each separate depositor, bank and ownership category, per FDIC. However, having a higher balance in a single savings account may allow you to access higher interest rates with a tiered APY structure, so it depends on the person.
