Having more than one bank account can help you stay financially organized. It separates your money into different funds and allows you to track your progress toward your savings goals. But things can get confusing if you don't have a game plan. That could lead to unwanted account fees and overdraft charges. Here's how to manage multiple bank accounts more effectively.
1. Understand Your Account Requirements
Clarify any account requirements that could trip up your finances. For example, if you're required to maintain a minimum account balance, you could be penalized if your balance drops below that amount. You might also run into the following bank fees:
- Monthly maintenance fee
- Inactivity fee
- ATM fees
- Nonsufficient funds fee
- Overdraft fee
- Stop payment fee
- Check fees
Knowing what's required can help you avoid unwanted charges. It might even prompt you to find a low- or no-fee account elsewhere.
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2. Track Your Account Balances
Being aware of your balance is always important, especially when you're juggling multiple bank accounts. It can help you adhere to minimum balance requirements and prevent overspending. That's where a strong budget comes in. There are multiple budgeting styles out there, but they all provide a framework for managing your income and expenses. That can help you:
- Achieve your financial goals
- Stay out of debt
- Prepare for financial emergencies
- Increase your financial confidence
You might prefer an app for managing multiple bank accounts. Budgeting apps can bring separate accounts together on one platform and even categorize your spending. No matter your budgeting method, be sure to clarify which bills are being paid from which accounts—and when they're due. Enrolling in autopay is a simple way to prevent missed payments.
3. Give Each Bank Account a Job
One benefit of having multiple bank accounts is that you can use each one for something different. If you haven't already done so, consider giving each bank account a job. That might look like:
- Having one checking account that's only used for receiving direct deposits and paying bills
- Designating another checking account for everyday spending and entertainment
- Opening multiple savings accounts for different financial goals
- Having another high-yield savings account or money market account for emergency savings
If you have a spouse or partner, you can work out the details together. You might choose to maintain separate spending accounts, then contribute equally to a different account that's used for household bills. Having multiple accounts allows for flexibility.
4. Take Advantage of New Account Bonuses
If you're looking to open another checking or savings account, check with the financial institution you're already banking with. They can automatically link your accounts—and your bank might offer special new-account bonuses to existing customers. If not, you can shop around and compare cash bonuses at different banks. Be aware that you may have to meet certain requirements like:
- Being enrolled in direct deposit
- Maintaining a minimum account balance for a predetermined amount of time
- Making a minimum number of purchases from the account
- Paying a certain number of bills with the account
5. Periodically Review Your Banking Needs
The reason you have multiple bank accounts could change over time. For example, you might be using an extra high-yield savings account to set money aside for a down payment on a house. Upon reaching that goal, you could continue using that account for something else, or close it out. It's also wise to periodically check in on your money management system to see if anything needs to be tweaked. Here are some questions to answer when taking stock of your bank accounts:
- Are you getting the best interest rates on your savings accounts? You might find better annual percentage yields (APYs) at competing banks.
- Are there any fees associated with your accounts? If account fees are eating into your balances, you might consider switching.
- Do multiple bank accounts still make sense for your needs? Consolidating your accounts could streamline your finances and make for easier budgeting.
6. Don't Forget About Your Credit Health
Unlike credit cards and loans, bank accounts don't affect your credit score. That's not to say your account activity isn't important. Your ChexSystems report keeps track of your deposit accounts. Having a history of overdrafts and unpaid negative balances could prevent you from getting approved for a bank account in the future. But you'll need to look beyond your bank accounts to build a good credit score.
Instead of opening a second checking account for recurring bills, you could use a rewards credit card. Paying your bill on time and in full every month can help improve your credit—and get you cash back, airline miles or hotel points.
The Bottom Line
Having multiple bank accounts can be a great way to organize your finances and work toward your money goals, but you'll want to stay on top of the details. That can help you avoid bank fees and get the most out of your accounts.
In the meantime, Experian has plenty of resources to help you manage your credit health. You can check your credit report and credit score for free at any time.