Are you wondering how many bank accounts you should have? The answer may surprise you! While the number of accounts varies for each person, having multiple bank accounts can offer numerous benefits. In this article, we’ll explore the advantages of having multiple accounts and provide tips on managing them effectively.
Reasons to Have Multiple Bank Accounts
Budgeting
One of the key advantages of having multiple bank accounts is budgeting. By separating your money for expenses and savings, you can easily track your spending and stay on budget. You can also set up different accounts for specific savings goals, making it easier to monitor your progress.
Access to Features and Perks
Different bank accounts come with unique features and perks. While many accounts offer multifunctionality, having multiple accounts can unlock additional benefits. For example, a checking account provides access to ATMs, checkbooks, and bill-paying features. Savings accounts earn interest, helping you reach your savings goals faster. You can even explore high-yield savings accounts, money market accounts, or certificates of deposit for even higher interest rates.
Separating Finances
Having multiple bank accounts can be particularly useful for separating finances when needed. Couples may opt for a joint account for shared expenses while maintaining separate accounts for personal funds. Small business owners can benefit from having a dedicated account for their business finances, simplifying bookkeeping and tax purposes.
Bank Bonuses
Some banks offer cash bonuses to attract new customers. By meeting specific requirements, such as setting up direct deposits or maintaining a minimum balance, you can earn these bonuses. Keep an eye out for such offers and take advantage of them to boost your finances.
Flexibility
Certain bank accounts may have restrictions or transaction limitations. By having multiple accounts, you can navigate around these limitations and enjoy more flexibility in managing your finances.
How Many Bank Accounts Should You Have?
While there is no one-size-fits-all answer, starting with at least two accounts is generally recommended—a checking account and a savings account. This provides you with an everyday banking account for expenses and another account for savings.
However, your banking journey can go beyond these two accounts. There are checking and savings accounts available with various features and functions. For example, First Citizen Bank offers free checking accounts as well as interest-bearing accounts with extra features. Quontic Bank provides checking accounts that earn high-yield interest or cash back rewards. By having more than one checking account, you can take advantage of these unique benefits while still having an account for everyday use.
Savings accounts, in particular, are where having multiple accounts can be beneficial. By separating your savings into different accounts based on specific goals, such as emergency funds or long-term savings, you can better track your progress and stay motivated. Consider pairing your basic savings account with a high-yield savings account from an online bank to maximize your savings potential.
Other Bank Accounts to Consider
While checking and savings accounts are essential, there are other account options to explore:
Money Market Accounts
Money market accounts combine the convenience of a checking account with the earning power of a savings account. These hybrid accounts often come with check-writing privileges, debit or ATM cards, and competitive interest rates.
Certificates of Deposit (CDs)
Certificates of deposit (CDs) offer higher interest rates in exchange for keeping your funds untouched for a fixed period. Online banks like CIT Bank and Quontic Bank offer CD terms with high-yield interest rates.
Pros and Cons of Multiple Bank Accounts
Before diving into multiple bank accounts, let’s weigh the pros and cons:
Pros:
- Track multiple savings goals easily
- Take advantage of features and perks
- Earn higher interest rates
- Separate finances efficiently
Cons:
- More minimum balances to maintain
- Multiple bank logins to remember
Tips for Managing Multiple Bank Accounts
Managing multiple bank accounts can seem daunting, but with a few tips, you can stay organized:
- Double-check before making transactions to avoid mixing up accounts.
- Prioritize savings by setting and saving towards short-term and long-term goals.
- Link your accounts to simplify fund transfers.
- Pay attention to fees and choose accounts with no fees or realistic ways to waive them.
- Decide how many banks to use based on your specific needs and preferences.
Let Your Banking Needs Guide You
Ultimately, the number and types of bank accounts you open should align with your financial needs and goals. Start with a checking account and a savings account, and expand as necessary. Compare rates, fees, requirements, features, and customer service options to find the right accounts for your personal banking system.
Remember, there is no perfect formula—what works for someone else may not work for you. Customize your banking plan to maximize your finances and enjoy the benefits of multiple bank accounts.