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Published: May 25, 2023 12 min read

If you have been successfully managing your single bank account, you may wonder why so many people have multiple accounts. Likewise, if you have several accounts, you may wonder whether you need them all in the first place.

Depending on your needs, having multiple bank accounts with different banks can have advantages. That's why it's essential to answer the question of how many bank accounts you should have to meet your specific financial needs and preferences.

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Why do you need more than one bank account?

According to a 2021 survey carried out by the Federal Deposit Insurance Corporation (FDIC), 81% of all American households have at least one bank account, typically a checking or savings account. However, having multiple bank accounts with different banks can be a means to make the most of your money. Among other benefits, having additional accounts can give you access to various features you wouldn't get with just one account, as explained in more detail below.

What are the benefits of having multiple bank accounts?

Here are a few advantages that having multiple bank accounts can provide:

  • Financial flexibility. Having multiple bank accounts allows you to store money in different places and access it quickly when needed. This makes it easier to manage your finances and budget.
  • Improved savings. Multiple accounts can help you save money more effectively. By splitting your money, you can easily track how much you put into savings and how much is available for spending. You can also set up accounts specifically designed for various goals, such as long-term savings or emergency funds.
  • Better security. Multiple bank accounts can help protect your money from theft or fraud. With money split between accounts, a single incident won’t deplete all your funds.
  • Feature variety. Different banks offer different features and benefits, ranging from higher interest rates to alternative payment methods. With multiple accounts, you can access more of these features, making it easier to manage your finances and make payments.
  • Better organization. Having multiple bank accounts can help you organize your finances as you prefer. For example, if you receive multiple payments from different sources, you can have separate accounts to track each income stream. This is especially beneficial for business owners and freelancers.

Determining how many bank accounts you should have

How do you decide how many accounts you should have? The answer depends on your individual financial goals and needs. Some of the factors you may want to consider before deciding how many bank accounts you should have are:

  • Budget. Consider your budget and how much money you need to store in each account. For instance, if you have a budget of $2,000 per month and need to split this between bills, expenditures and savings, you may need three or four accounts to store and manage your money efficiently. You can have one checking account for bills, one saving account for long-term goals and two more accounts for shorter-term investments.
  • Savings goals. Consider your savings goals and how many accounts you need to reach them. For example, if you want to save for a down payment on a house in the next 10 years and simultaneously save for a vacation next year, you may need two accounts. Since the down payment goal is long-term, you can put that money away in a high-yield savings account with a long-term time horizon. On the other hand, you can keep the vacation funds in a more accessible account, such as a money market account.
  • Safety and security. How important is it for you to protect your money from fraud or theft? If this is a priority for you, you can set up two or three accounts with different banks and split your money among them. By doing so, you can take advantage of various security features because one bank may have two-factor authentication, additional ID authentication and another biometric authentication.
  • Features and benefits. Different banks offer different features and benefits, so consider what you need before opening multiple accounts. For instance, the best national banks may offer higher Annual Percentage Yields (APYs) or lower fees than smaller local banks. On the other hand, local banks may offer more personalized service and access to additional services (like a notary) that may be unavailable at larger banks. With this in mind, you can have an account in each bank with the features and benefits to fit your needs.

Now, let's explore the different types of accounts you can opt for:

Checking accounts

A checking account is the most common bank account type used for everyday spending and bill payments. How many checking accounts you should have depends on how you manage your money. Some people prefer to open multiple checking accounts for budgeting, while others find that having just one checking account is sufficient.

If you have several income streams or need to separate household expenses, opening multiple checking accounts for budgeting may help you stay organized. It will let you better track your spending and income and set up different budgets for various expenditures.

To make the most of your various checking accounts, first establish what additional features you need. When choosing the best checking accounts for your finances, consider services such as online banking, mobile deposits and free automated teller machine (ATM) access.

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Bills and expenses

You may need a separate checking account for bills and expenses, such as rent and utilities, especially if you share these expenses with another person or household. A checking account for bills will help track how much you spend monthly. For instance, if you split rent with a roommate, having a separate joint bank account makes tracking how much each person owes easier.

Regular spending and Personal finances

Consider having a separate account for your regular spending and personal finances. It will help you track how much money you have to spend on groceries, entertainment and other everyday purchases. Separating your finances this way can also make it easier to stay on top of your budget and track how much money you save at the end of each month.

Savings accounts

You may benefit from having multiple savings accounts depending on your savings goals. As there are different types of savings accounts available, let's discuss them in detail so that you can choose the best savings accounts for your needs.

Long-term goals

If you have long-term savings goals, such as retirement or college tuition, consider opening an individual retirement account, employer-sponsored retirement account and a 529 college savings plan. But as these accounts have different benefits and features, it's essential to research them before opening.

For example, employer-sponsored retirement accounts usually offer higher interest rates and tax breaks, making them more beneficial for long-term investments. On the other hand, individual retirement accounts and 529 plans offer greater flexibility in withdrawals.

Short-term goals

Basic savings accounts may be a better option if you're saving for something short-term, such as a vacation or home improvement project. These typically offer lower interest rates but give quick access to your money.

You may also want to consider a high-yield savings account offering higher interest rates than a basic one. The best high-yield savings accounts will offer higher interest rates without fees, so comparing different offers is crucial before deciding on one.

Emergency fund expenses

Having an emergency fund is essential for ensuring your financial security. An emergency fund should be easily accessible in case of unexpected expenses, such as medical bills or car repairs. However, consider having one bank account for your emergency fund to separate it from your other savings. It may help you save more money and track how much you contribute to your emergency fund expenses.

Business accounts

Business bank accounts are essential if you're self-employed or running your own business. They are typically separate from personal accounts and provide features and benefits that aren't available with a personal account. For instance, you may get access to business credit cards, which can help you manage your business expenses more efficiently.

Your business finances should never mix with your personal finances, so having a separate business account is essential for keeping track of your funds.

Account for online banking

An online account can serve as both a checking and savings account. Online savings accounts typically offer higher interest rates than traditional ones and provide advanced features such as automatic transfers, mobile deposits and budgeting tools. Online checking accounts give access to online banking services such as bill pay and remote direct deposits.

Generally, online accounts are great for managing your money from anywhere in the world, so if you travel frequently or work remotely, you can significantly benefit from an online account. Check out the best online banks of 2022 and 2023 to find the best online checking accounts for your needs.

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Money Market account

A money market account is both a savings and checking account, as it allows you to earn interest on your balance and gives you access to check-writing privileges and a debit card. It makes a great way to save money and accumulate more interest, as the account offers higher interest rates than a traditional savings account. However, there is typically a minimum balance requirement for money market accounts, so it's essential to keep that in mind if you're considering opening one.

Certificate of Deposit (CD)

A certificate of deposit account (CD) is a savings account with a fixed interest rate and a predetermined maturity date. Depending on the terms, you may have access to your money before the maturity date, but there will typically be a penalty for early withdrawals. Certificates of deposit are great for saving money for a specific goal, such as retirement or buying a house.

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Multiple Bank Account FAQs

Can your accounts be at different banks?

Having multiple bank accounts with different banks is possible and sometimes preferred. It can allow you to access features and services that may not be available in one bank and help you better manage your finances. On the other hand, having multiple checking accounts with the same bank may pose a risk of having too much money in one place and expose you to potential cyber-attacks that have been on the rise lately.

What are the negatives of having multiple bank accounts?

While there are certainly benefits to having multiple bank accounts, there are also some drawbacks. These include:
  • Managing multiple bank accounts: It can be challenging to track all bank accounts. You may need to switch between banking apps or websites to view all your accounts or manually transfer money between them.
  • Paying multiple fees: Multiple accounts may also mean higher expenses, as many banks charge per-account rates.
  • Having multiple interest rates: Different accounts may also bring different interest rates, making it challenging to track which one is earning you the most money.
  • Handling numerous login credentials: Keeping track of multiple login credentials can be a hassle, as you need to remember the username and password for each account.
  • Transferring money between accounts: Transferring money between accounts can also be tricky, as some banks may not allow you to do so or charge a fee for the transfer. It's essential to research this before opening multiple accounts.

Find the best bank account for your financial situation

In summary, the answer to the question "How many bank accounts should you have?" depends on your financial needs and preferences. There isn't a one-size-fits-all solution, as each person's financial situation is different. Having two or three accounts may help you better manage your money, but only if you personally find it beneficial and sustainable.

Consider what types of bank accounts you may need to achieve your savings and spending goals and the features and benefits different banks offer. That may help you narrow down your choices and pick the right number of accounts for your situation. For more information and guidance on where to open desired accounts, check out the comprehensive guide on how to pick a bank.