How Many Bank Accounts Should I Have?

Quick Answer

The number of bank accounts you should have varies based on your individual needs. That said, it’s a good idea to have multiple bank accounts to take advantage of the different features each type of account provides.

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Banks offer a variety of accounts that provide different features. While it makes sense to use a checking account for your everyday money management, it's a good idea to have multiple types of bank accounts to make the most of your money.

Here's why it makes sense to have multiple bank accounts and which ones to consider.

4 Reasons to Have Multiple Bank Accounts

You may wonder if it makes sense to limit the number of bank accounts you have to keep things simple. However, the benefits of having multiple accounts can make the extra work to keep track of everything worth it.

Earn More Interest

Most checking accounts don't offer interest on your balance, and if they do, the interest rate is near zero.

Adding a high-yield savings account to the mix can help you earn more on the cash you don't need for immediate financial needs. If you can afford to lock up some funds for a longer period, you could earn even more with a certificate of deposit.

Earn Money Faster

Find High-Yield Savings Accounts

Get More Insurance Coverage

The Federal Deposit Insurance Corp. (FDIC) insures up to $250,000 per bank, per depositor, per ownership category. If you're in the fortunate position to have more than that in the bank, getting an account with another bank increases the total amount of insurance protection you receive.

For example, keep $500,000 in one checking account and only half of it's insured (if you're the sole account owner)—but transfer half of it to a checking account with another bank, and the full amount is covered in the event that both banks fail.

Be More Effective With Savings Goals

If you have different savings goals, it could make sense to open high-yield savings accounts for each one. That way, you can track each goal individually, making it easier to stay organized and know where you stand.

Share Finances

If you have a spouse or partner, but you don't want to share all of your finances, it could make sense to have individual accounts for you and joint accounts with your loved one. This approach can help you better manage your money in a way that works for your relationship, including both individual and shared financial goals.

If you have children, you can also open a joint account with them to help them learn how to manage their money responsibly as they grow older.

Types of Bank Accounts

Bank account options can vary with each bank, so if your bank doesn't offer all of the accounts you want, you may need to switch to a different bank or maintain accounts with two financial institutions.

That said, here are the most common types of bank accounts:

  • Checking account: You can use this basic bank account for your everyday money management, such as paying bills, writing checks, receiving direct deposits and making purchases with your debit card. Checking accounts typically don't offer interest, but some do.
  • Savings account: A traditional savings account doesn't offer a high interest rate, but it can be a great place to stash your emergency savings, as well as savings for short-term financial goals.
  • High-yield savings account: A high-yield savings account provides the same safety and liquidity as a standard savings account, but it offers a much higher interest rate.
  • Money market account: Money market accounts act as a hybrid between a checking account and a savings account. You can often get a higher interest rate than a standard checking or savings account with a money market account, and you'll also get the ability to write checks and sometimes even use a debit card tied to the account.
  • Certificate of deposit: A certificate of deposit (CD) often offers a high interest rate in exchange for committing your funds for a set period, which can range from a few months to several years. They don't always offer higher rates than high-yield savings accounts, though, and many charge fees if you withdraw your money before the account's maturity date.

Benefits of Having Multiple Bank Accounts

There are several benefits to using multiple bank accounts. Depending on your situation, here are some to consider:

  • Different accounts for different purposes: While a checking account is great for everyday money management, it's not as well-suited to saving for the future as a savings account. On the flip side, savings accounts and money market accounts offer interest, but they typically only allow six withdrawals per month, making them better for parking your money but not a practical choice for everyday expenses.
  • Higher interest rates: High-yield savings and money market accounts can offer higher interest rates than checking accounts and traditional savings accounts. If your bank or credit union doesn't offer a high-yield savings product, it could make sense to open such an account with a different financial institution.
  • Take advantage of different benefits: In some cases, it may make sense to have more than one checking account or savings account. For example, many online banks offer more account features than traditional banks and credit unions. However, they typically don't work well with cash deposits. As a result, it can make sense to have an account with a local bank or credit union for cash deposits and withdrawals and an online bank account for other banking needs.

Drawbacks of Having Multiple Bank Accounts

While there are some clear advantages to having multiple bank accounts, there are also some potential drawbacks to consider:

  • Minimum balance requirements: Some banks and credit unions require that you keep a certain amount in your account to keep the account open or to avoid a monthly fee. If you don't have enough money to spread out across multiple accounts, it may not be worth the hassle.
  • Fees: It's possible to find several bank accounts that don't charge monthly fees, but if you decide to choose banks or credit unions that charge them, it can get expensive fast.
  • Organization: It's important to stay organized if you have more than one bank account. It'll be harder to keep track of your money if you have to log in to multiple online accounts to check your transactions. Forget about a recurring payment, for instance, and you may accidentally overdraw your account and get slapped with a fee.

How Many Bank Accounts Should You Have?

Having multiple bank accounts can be beneficial, but how many you decide to have depends on your situation and goals.

If you have several short-term savings goals, such as building an emergency fund and saving for a down payment on a house, consider opening a savings account for each one to make it easier to track your progress.

Take your time to consider your situation, your preferences and your goals to determine how many bank accounts are right for you.

If you're not sure, start with a checking account. Then, once you start building up some savings, consider opening a high-yield savings account to earn more interest on those funds while they're parked. As your savings grow, you may add more savings accounts to organize all of your financial goals.

Once you can afford to go beyond your basic savings goals, it could make sense to add a money market account or CD into the mix to take advantage of higher returns on your balances.

What to Consider When Opening a Bank Account

Ultimately, the features you look for in a bank account will depend on the type of account you're interested in. In general, though, consider the following elements as you research and compare your options:

  • Monthly fee: These are more common with checking and money market accounts, but some traditional savings accounts may also charge them. If an account charges a fee, check for options to get it waived.
  • Access to your cash: Find out how many ATMs each bank has in your area to determine how easy it'll be to get cash when you need it. For traditional banks, you may also consider how many local branches there are.
  • Annual percentage yield: As you compare savings, money market and CD accounts, try to get an account with a high annual percentage yield (APY) to make the most of your savings.
  • Balance requirements: Some bank accounts require a minimum opening deposit amount, as well as ongoing balance requirements. In some cases, you'll be charged a monthly service fee if you don't meet the minimum.
  • Other features: Some banks may offer other features that add more value to your banking experience. For example, some may offer ATM fee reimbursements when you use out-of-network machines. Others may let you create individual savings "vaults" in a single account rather than opening multiple savings accounts to track different goals.

Frequently Asked Questions

  • The FDIC and the National Credit Union Administration (NCUA) offer up to $250,000 in coverage per depositor, per bank, per ownership category. To get more than the $250,000 maximum, you can open accounts with separate banks. Alternatively, you can open multiple accounts with the same bank using different ownership categories.

  • If a single institution offers all the banking features you need, it can make sense to stick with just one bank instead of opening accounts at separate banks. However, if your bank doesn't offer all the features you want or you want a higher insurance coverage limit, consider using multiple banks.

  • In general, bank accounts don't affect your credit score, and they don't show up on your credit report. One exception is if you have a negative balance on a checking account and never pay back what you owe, the bank may report it to the credit reporting agencies as a charged-off account.

Use Financial Tools to Improve Money Management

If you're planning to use multiple bank accounts, consider using a budgeting app to keep track of all of them more easily. These tools use direct import software to update all of your transactions in one place.

Additionally, consider using a credit monitoring service to help keep track of your credit score. With Experian, for example, you'll get free access to your Experian credit report, your FICO® Score and customized alerts when certain changes are made to your report.

Tools like these make it easier to keep track of your finances without requiring a lot of time and effort on your part.