Multiple Bank Accounts: Is Having More Better or Worse?

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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

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Comments

  1. We have one account that we use for our day to day stuff.  We have a dormant checking account at a credit union just so we can stay active.  We have two savings accounts, one at ING (insured) and a Demand Notes account at Ally (great interest rates but uninsured).  Any more than that would be overkill.

  2. I would discourage anyone banking on a single bank!  Split your money at least between two banks. The reason is simple. If for some reason your bank puts a hold, it might’ve been a mistake, but it will take some time to get it resolved and meanwhile your bills will be getting piled up.
     
    Another scenario is your bank going belly up.  Sure you will get your money back, but it is going to take some time.  Meanwhile, you still have to take care of your bills.

  3. I keep multiple accounts across 2 banks, USAA and Ally.  USAA is my daily stuff and short term savings (like holding money back for rent or loan payments) and Ally houses my long term savings like my e-fund, auto fund & my freedom fund.

  4. My wife and I have a lot of accounts, probably 2 or 3 too many. But they all have a purpose so that’s good at least. But really it’s 1 main credit card, 1 main checking account, emergency savings, short term savings, all at the same bank.

  5. We have a proliferation of accounts and I love it!  However, the many-accounts are savings at our online bank.  They are targeted savings like you mentioned – easy accounting!
     
    We have 3 checking accounts as well at 3 banks, but 2 of them are nonfunctional now – nothing going in, nothing going out.  I think Mint helps so much in keeping track of all the accounts.  I wouldn’t keep so many accounts if they were actively used checking because of possible overdrafting like you said.
     
    Honestly, I would add more savings accounts at our current bank.  I see basically no downside.

  6. financiallyc says:

    As much as I like to keep things simple, we do have multimple accounts. It helps me to separate priorities when I account for them in separate pots.

  7. I keep multiple accounts because I have one to receive rent payments from my roommates so that If that account ever gets compromised, I have several back ups to work with.  
     
    I also like having multiple accounts because you see a lower balance to make myself feel “poorer” and more like to spend less

  8. Funancials says:

    I have 2 banks I currently use. One that houses a few different accounts (checking, savings, credit card, brokerage) and one far away so I can’t easily access it (but it’s still liquid). 

  9. While I only have one checking and one savings account (different banks) right now, I love the idea of earmarking the money for specific reasons. Because I’m used to my system as it is, I’ve devised a sheet in my Excel workbook (aka my Budget Bible…haha) to track all of the balances for various goals.
     
    This helps me still feel the pinch of needing to increase certain categories (and subsequently spend less), but it also gives me the boost of having a large balance overall. The hard part is actually taking the money out of the account!  More than once, I’ve decided that I no longer wish to purchase whatever it was that I had saved for in lieu of keeping the $$ in the bank. :)

    • Good point about making it hard to withdraw! I do the same by keeping money stashed in ING Direct, which takes a few days to transfer at least. It’s accessible enough, but doesn’t make it a impulse situation.

  10. I’m a “recovering bank account hoarder”. :) I used to have 8 accounts, from checking to savings to investing. I too have a PerkStreet account, but still keep my Chase checking account open for quick cash withdrawals. But I’ve closed all my savings accounts except for 1, which I keep my emergency fund in (and basically never touch).
     
    I use a fantastic new program called Impulse Save to keep track of individual goals, like Estimated Tax payments and Lasik eye surgery. The money is all in one account, but online the software shows me how much I have towards each goal. It’s so much simpler!

    •  @Carrie Smith I just heard of Impulse Save! Seems really cool, I’ll have to check it out! I like the idea of being able to see how much I have saved for each purpose without needing different accounts for all.

      •  @Jeffrey Trull Awesome! If you end up trying it out, I can send you an invite (since it’s members only right now). And can answer any questions is if you have them. No pressure, I’m just available if needed and want to help. :)

  11. I have quite a few accounts for organizations sake. I have one that I put all of my blog income in for calculating and report purposes (and tax purposes now I guess). I have one that houses my EF and one for a vacation fund. Then I have the debt payback account into which I siphon any “found” or extra money. Then my retirement account and chequing accounts!

  12. I have 4 different bank accounts: 1) personal checking 2) non-monthly expense checking (car repairs, Christmas gifts, vacations, personal property tax, etc) 3) Emergency fund savings and 4) Business checking.
     
    It helps A LOT to have them split all out. I know many people that have multiple accounts for what I consider my “non-monthly” account, but I have a pretty cool spreadsheet that keeps track of each category. So, in essence I do have different accounts for each of those categories. As you said, it’s REALLY nice to know how much you have for each particular item/category.

  13. My quick count of categories in Mint?  36 accounts – Mint leaves a few out, but it also separates accounts I have with firms.  On the banking side, we have 8 accounts, haha.
     
    For us, we save in different accounts for different goals – but there is no way I could manage all of them without complicated automation and setting different goals for each.  I like Carrie’s term – I’m a proud account hoarder, and I don;t think I’ll be changing our finances anytime soon (unless I add more, haha!).

  14. I’m like you – I have a whole bunch of savings accounts with ING. I feel like that helps a lot to have them split up – I know exactly how much I have saved for each goal (wedding, honeymoon, dream house, emergency fund, etc).

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