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With brick-and-mortar banks, credit unions, and online banks, the options for where to open an account are limitless now. You could open dozens of accounts in a day without much effort. But should you?
While there’s no financial penalty for having many accounts, there are pros and cons to having many or having just one or two.
Why have multiple?
Having multiple bank accounts can lead to great organization if you manage it correctly.
For example, you can have different savings accounts for different savings purposes. Right now, I have a bike savings account, a “quit my job” savings account, an investment savings account, and more. ING Direct makes it easy to set up all these different kinds of savings accounts, and it takes only minutes to open a new one. I usually don’t hesitate to do so when I think of a new account I could use. I recent opened another new account (you can read my Ally Bank review here).
By having multiple accounts, it’s always easy to know how much money you have saved for each purpose. For example, I know that I have $170 set aside strictly for bike maintenance and repairs. If I mixed all these accounts together, it would require some other system of accounting to figure out how much money belonged to what purpose.
Since I adopted the Mint app on my iPhone, it’s been a lot easier for me to see balances in each account, too. I check it at least once a day since it literally takes less than a minute to take a look.
Why have only one or two?
While I enjoy having different accounts for different purposes, it’s definitely more confusing at times. This is especially the case with multiple checking accounts for me. I opened a PerkStreet account because of the great rewards, but I didn’t fully commit to choosing that account instead of my USAA one.
As a result, I transfer a limited amount money to PerkStreet to use for general spending when I receive each paycheck, but I still primarily use my USAA checking account for paying bills. While I enjoy the rewards, I find myself constantly checking my balance to avoid over-drafting.
Even having multiple savings accounts can probably be simplified. If I keep numbers simple and say that $5,000 is emergency savings and the rest is just general savings, I could make it work (although this still doesn’t seem preferable to me).
Which is better?
I’m going to stick with the multiple accounts plan for now. I still feel like having different accounts for different purposes keeps me more organized and on top of my current balances. I hate transferring money between checking accounts all the time, so I’ll make a decision on that soon and get rid of one. Overall, I’ll definitely consider switching back to a minimal number of accounts.
What do you think?
How many accounts do you have or do you think is best? Do you find that one system works better for you than another?
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photo by: cote