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If you are planning to save money for some goals and feel disorganized, having multiple savings accounts can be valuable to you. A savings account allows you to keep your money in a secure place and earn interest on your saved money. If you are having a single savings account you miss out on an opportunity of earning extra money. You can create a saving account for each goal and keep track of your savings. Life is unpredictable, and having savings for the uncertainties in life can be beneficial for your family, so save money by opening multiple savings accounts.
There is no common answer to “how many savings accounts should I have” or “how many checking accounts can I have”, it all depends on how many goals you need to save money for. In this article, we will focus on how savings accounts can be useful for you.
How Many Savings Accounts Should I have?
There is no common answer to this question, it entirely depends on how many goals you have to save money towards. You can have one savings account or 2 savings accounts or as many accounts as you want with banks or credit unions, it all depends on your goals and how prepared you are to manage them. Having multiple accounts helps you track your money. When you have your entire savings in a single account you cannot categorize the money based on your goals. You can designate an account based on your goals, which helps you check how much is saved and how much more is required to achieve that particular goal. It puts a stop to your unnecessary spending.
You can classify your savings account as per goals, such as a down payment on your home account, vacation expenses account, wedding funds, emergency funds, etc. Each of these goals is different. A down payment on your house may require more than 10 thousand dollars whereas vacation expenses may be less than $500, so, it is important to have multiple saving accounts for more efficient categorization.
Merits and Demerits of Having Multiple Accounts
Now, having multiple savings accounts has its share of merits and demerits. Before asking how many bank accounts should I have, it is important to know the pros and cons of it.
Merits
- It is easier to track your money if you have multiple accounts designated for specific goals. When you have all your savings in a single account, you cannot categorize the money based on your goals. That is why it is better to create multiple accounts so that you can evaluate your savings depending on your goals.
- You can set a certain amount to be transferred automatically to your savings accounts. This means that you can transfer, for example, $200 to emergency funds, $150 to car rentals and loans, etc., every month. This feature makes your financial management smooth and efficient.
- By having multiple accounts, you can benefit from APY (annual percentage yield) given by the banks. This is an easier way to earn money as it helps you reach your goal at a faster rate, by earning interest on your savings.
- Banks that are FDIC-insured banks offer insurance for up to $250,000 per account. Now, this feature secures your money if your bank fails. However, The limit is up to $250,000 so it is better to split your money between accounts.
Demerits
- Having multiple accounts can be confusing sometimes, especially, if you are a disorganized person, and the accounts are in different banks. Sometimes, you can forget about a savings account and the bank can charge an inactivity fee or close it for not using it.
- Banks can charge fees on accounts that do not meet the minimum balance requirement. You have to always keep a check on your accounts, so the balance does not drop below the minimum requirement. This becomes a tough task to follow. Some banks charge excess withdrawal fees as well.
- Banks usually have a set amount that you should have in your account to earn interest. This usually gets difficult when you have multiple savings accounts as you have to meet this requirement for each account.
Is it Good to have Multiple Bank Accounts?
Even though there is no cut-and-dry answer to the question “ how many bank accounts should I have ?” There are a myriad of benefits, other than saving money for your goals, to be availed by having more than one bank account. Let’s look at a few of them:
Allocating Money Automatically to Savings Accounts
You can set a certain amount that will be transferred automatically to your savings accounts. This means you can transfer for example $200 to emergency funds, $150 to car rentals and loans, etc, every month. This feature makes your financial management smooth and efficient.
Tracking your Progress
It is easier to track your money if you have multiple accounts. When you have your entire savings in a single account you cannot categorize the money based on your goals. That is why it is better to create multiple accounts so that you can track your savings depending on your goals.
Inspired to Save Money
When you create accounts based on your goals, you can check on how much is saved and how much more is required to achieve, this inspires you to save money. It puts a stop to your unnecessary expenses and gives you a clear picture of how much to earn and save money on your low income.
Earn Interest in your Savings
Before creating a savings account, check for the APY (annual percentage yield) given by the respective bank. It is an easier way to earn money. This helps you reach your goal at a faster rate.
Safe and Secure Place to Save your Money
An FDIC-insured bank offers insurance for up to $250,000 per account, this feature secures your money if your bank fails. The limit is up to $250,000 so it is better to split your money between accounts. Creating multiple accounts does not affect your credit score, you can use credit cards to build credit.
We have that your query about whether is it good to have multiple bank accounts has been resolved through this list. Now, let’s see how to handle your savings accounts.
How to Manage Multiple Savings Accounts?
It is easy to manage multiple savings accounts if all the accounts fall under one bank. Before selecting a bank, make sure to check for the APY (annual percentage yield) given by the respective bank. It is an easier way to earn money. Now, after selecting the bank, take a closer look at the terms and conditions, and look for the minimum balance requirement needed for earning interest on that account.
Once you have gone through all this, it is time to open the accounts. After opening the accounts, you can set a certain amount that will be transferred automatically to all your savings accounts. This means you can transfer for example $200 to emergency funds, $150 to car rentals and loans, etc, every month. You can decide how much to transfer by having a clear picture of your goals. Lastly, if you wonder can you have multiple savings accounts?
Therefore, to answer your question “ how many savings accounts should I have “, you can have as many savings accounts as possible. However, make sure that, after allocating amounts to be transferred, remember to include these amounts in your budget, and try to cover them.
Which Type of Savings Accounts Should You Go for?
Another thing to consider while creating multiple accounts will be which type of savings account will benefit you the most. Usually, there are 5 types of savings accounts
- A regular savings account at a traditional bank.
- Money market savings account.
- High-yield money market savings account.
- A high-yield savings account at an online bank.
- Christmas Club or other specialty savings account.
You can go for any of these types of accounts. When you are about to create an account, and thinking about how many saving accounts can you have, you should look for minimum balance requirements and interest rates. The bank with the lowest fees and high-interest rates should be your ideal choice.
Finally, to answer the question of how many savings accounts can you have? There is no limit to it. You should go through the terms and conditions of the bank and check for any reviews present online or offline. Calculate the interest rates and fees that you have to pay back and then make an informed decision on which bank to choose. We have prepared a table of some of the best savings account options with 0 minimum balance requirement that you can go for.
| Name of the Institution | APY (annual percentage yield) |
|---|---|
| Capital One | 3.40% |
| Marcus: by Goldman Sachs | 3.75% |
| BARCLAYS | 3.60% |
| My Savings Direct | 4.35% |
FAQs
Q1. Is it OK to have multiple savings accounts?
Yes, it’s fine to have multiple savings accounts. Having multiple accounts is beneficial in categorizing your savings based on goals, it keeps a track of your spending and you can save money towards a designated account set for a particular goal.
Q2. Does opening a savings account affect your credit score?
No, it does not affect your credit score. Banks do not report your savings account to credit bureaus. Usually, banks use the ChexSystems report to check your identity and banking history when you apply to open an account.
Q3. Is it illegal to have two bank accounts with different banks?
No, it is legal to have 2 savings accounts with different banks, you can have as many accounts as you want with banks or credit unions. There is no cut-and-dry answer to how many checking accounts can I have.
Q4. What are the negatives of having multiple bank accounts?
Everything has its positives and negatives, the negative aspects are
- Having multiple accounts can be confusing at times.
- Banks can charge fees if you don’t meet the minimum balance requirement of each account.
- Banks usually have a set amount that you should have in your account to earn interest. Having multiple accounts makes it difficult to meet this requirement for each account.
Conclusion
If you are looking for some ways to save money and realize your financial goals, saving accounts can be useful for you. A savings account allows you to keep your money in a secure place and earn interest on your saved money. With multiple savings accounts such as 2 savings accounts, you can categorize the money based on your goals. There are also negatives to it, like the confusion caused by having multiple accounts. Nevertheless, multiple accounts can be useful, if you have clarity of your goals and manage them well.
