Can you have multiple bank accounts? The answer is a resounding yes—and there are lots of reasons you might want to. Whether you're saving for a big purchase, keeping track of household expenses, or separating your personal and business finances, having more than one bank account can offer some great benefits.
But, there are also a few things to consider when you have multiple accounts, including potential drawbacks. Let’s explore the ins and outs, with the guidance of financial experts.
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So, can you have more than one bank account?
Yes. Banks and credit unions allow individuals to open multiple accounts, and there are no legal limits on the number of accounts one can hold.
“If a bank is willing to let you open an account, you can,” says Gates Little, President and CEO of The Southern Bank Company. “Generally, you only need to pass a credit check to get the green light and open your account.”
Can a person have two accounts in the same bank?
Yes, this is quite common. For instance, you might have a checking account for everyday expenses, a savings account for emergencies, and another savings account for specific goals, like a vacation or a down payment on a house.
So, instead of asking, “Can I have multiple accounts with my bank?” think about why it might be a smart move for you.
One of the main advantages of keeping all your accounts within the same institution is the ease of management. Transferring money between accounts is usually instantaneous, and you can handle all your finances from a single online portal.
However, if the bank experiences technical issues or if you're not happy with its services, managing your money could become more challenging.
What about having two bank accounts with different banks?
Opening accounts at different banks can offer several benefits, especially if you're looking to maximize interest rates, take advantage of different banking services, or spread your risk.
For example, some online banks offer high-yield savings accounts with much better interest rates than traditional banks. In contrast, a brick-and-mortar bank might offer better customer service or more convenient access to physical branches.
So, can you have an account with more than one bank? Yes. Diversifying your accounts across different banks can also provide security. If one bank has a system outage or you lose access to your account, you can still manage your finances through another bank.
But, keep in mind: “That’s another account to reconcile, another set of fees to pay, and another card to keep track of every month,” Little says. “Since finances are already difficult for so many of us, adding complexity to the process can be detrimental.”
Whether you're considering checking accounts, savings accounts, or even specialized accounts like money market accounts, it's possible to have several of each. But the real question is, should you?
What are the disadvantages of having multiple bank accounts?
There are potential downsides to having more than one bank account to consider:
It’s time-consuming
Keeping track of different balances, maintaining minimum balance requirements, and monitoring multiple statements can be time-consuming and confusing. If you're not organized, you could inadvertently overdraft an account, miss a bill payment, or forget to transfer money between accounts, leading to fees and penalties.
Your credit score might suffer
While having multiple bank accounts does not directly affect your credit score, how you manage those accounts can. Do too many bank accounts hurt your credit? Maybe. For instance, if you open several accounts within a short period, lenders might see this as a red flag and a sign of financial instability. Additionally, if you use overdraft services frequently, those transactions could affect your credit if not managed properly.
You’ll get fewer benefits
Spreading your funds across multiple accounts can sometimes dilute the benefits you receive from each account. But how many bank accounts are too many? It depends. For example, you might miss out on higher interest rates or tiered rewards programs that require higher balances.
It requires more tax documentation
Managing multiple bank accounts can lead to an increase in tax-related paperwork. “With multiple accounts, especially those that earn interest, you may receive several 1099 tax forms,” says Kristy Kim, CEO and Founder of TomoCredit, a FICO-independent credit card. “This can complicate the tax filing process and require more thorough tax documentation during tax season.”
Benefits of having more than one bank account
Of course, there are also reasons it is OK to have accounts with multiple banks or the same one. Despite the potential disadvantages, there are several strategic benefits.
Easier budgeting and financial discipline
Separating funds for different purposes can help with budgeting and financial discipline. For example, you might have one account for bills, another for savings, and a third for discretionary spending. This separation can help prevent overspending and ensure that you're consistently saving toward your goals.
It provides a safety net
Multiple accounts can also provide a safety net in case of emergencies. If one account is compromised, you have others to fall back on, reducing the risk of losing access to all your funds.
Access to banking products and services
Diversifying your accounts can help you take advantage of various banking products and services, such as higher interest rates on savings accounts, cashback rewards on checking accounts, or specialized accounts for business needs.
“For instance, certain savings accounts may offer high APY rates, and specific checking accounts might include commercial offers or discounts with different brands,” Kim says. “Choose a high-yield savings account for your savings, as many banks today are offering 4.25% APY or higher.”
(APY, or Annual Percentage Yield, represents the amount of interest earned on an account over a year, accounting for compounding, which can significantly boost your savings over time.)
5 tips for managing multiple bank accounts—from an expert
Managing multiple bank accounts can be challenging, but with the right strategies and planning, you can keep your finances organized and maximize the benefits.
Loretta Kilday, senior financial attorney and spokesperson for Debt Consolidation Care—a team of debt counseling consultants—shares her best tips.
1. Get that app
Take advantage of technology: online banking tools, apps, and budgeting software to monitor your accounts in one place. Many banks offer features like alerts for low balances, and spending tracking to help you manage your money.
“You can also use financial management platforms like YNAB, CashApp, Rocket Money,” Kilday says. “With such a tool, you can track your finances across different accounts and view them through one unified dashboard. Also, use a password manager software to store all your passwords securely in one place.”
2. Forget about calendar reminders
Set up automatic transfers between accounts to ensure that you're consistently saving and paying bills on time. Automating your finances can reduce the risk of missing payments or overdrafting an account. “You can enable security protocols like 2FA to your bank accounts,” Kilday says. “That will add an extra layer to your security.”
3. Keep an eye on your money
Make it a habit to review your accounts regularly. Check for any fees, unusual transactions, or opportunities to optimize your banking strategy, such as switching to a higher-yield savings account.
4. Don’t go too crazy
While it's tempting to open multiple accounts, avoid opening more than you can manage effectively. Focus on the accounts that offer the most value and align with your financial goals.
5. Be aware of the fees
Consider the account fees, minimum balance requirements, and other account terms. Choose accounts that fit your needs without costing you more in fees than you earn in interest or rewards.
Bottom line
Whether you're considering opening additional accounts for specific goals, spreading your savings across different banks, or simply looking for ways to optimize your financial management, multiple bank accounts can be a valuable tool. As with any financial decision, the key is to tailor your approach to your unique circumstances and goals.
FAQs
Should I split my savings between banks?
It can be a smart move, particularly if you're looking to take advantage of different interest rates or insurance limits. The Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000 per depositor per bank. If you have more than this amount saved, spreading your money across different banks can ensure that all your funds are fully insured.
However, you'll need to track balances and interest rates at multiple institutions and ensure that you're meeting any minimum balance requirements to avoid fees.
How many bank accounts should I have for budgeting?
A common approach is to have at least three accounts: one for everyday expenses, one for savings, and one for discretionary spending. This basic structure can help you keep your spending in check while ensuring that you're saving regularly.
For more complex financial situations, you might consider additional accounts. For example, if you're saving for multiple goals, such as a house down payment, a vacation, and an emergency fund, separate accounts for each goal can help you stay organized and motivated.
Who benefits the most from having multiple accounts?
Typically, individuals with diverse financial goals, such as saving for retirement, managing a business, or planning for large purchases, find it beneficial. Families might also find it helpful to have joint accounts for household expenses, separate accounts for personal spending, and savings accounts for children's education.