When it comes to personal banking, most people have at least one checking and one savings account, which is pretty much all anyone needs. However, many people choose to open more than one bank account for various reasons. Here are a few benefits of maintaining two or more bank accounts.
- Makes Budgeting Easier
People generally take on more financial responsibilities as they get older, like mortgages, utility bills, expenses for children, and more. This can make it challenging to keep track of finances when all of the earnings and spending are concentrated in one bank account. This is precisely why people, especially married couples and families, choose to open an additional checking account. A popular strategy is to dedicate one account to bills and another account to “fun” funds. Some married couples may choose to maintain a joint account for shared expenses and their accounts for discretionary spending.
- Takes Advantage of Perks
Different banks offer different perks to draw in customers. For example, one bank might have more ATMs available in the local area, while another offers higher interest rates for savings accounts. Some banks will waive foreign transaction fees, which is an attractive perk for those planning to travel outside the country. For those who are already set on opening an additional bank account, it makes sense to shop for one that allows access to a different set of benefits.
- Keeps Emergency Fund Safe
Every household should have an emergency fund. Many people feel more comfortable keeping their emergency funds in an entirely separate account, reducing the risk of accidental spending. It may also be a good idea to stash an emergency fund in a high-yield account, such as a CD or money market, which allows the funds to generate interest.
- Organizes Savings Goals
For individuals trying to save money for a specific goal, it can be very strategic to open a separate savings account. Some common examples include saving up for vacations, a down payment on a home, or an upcoming wedding. Keeping a separate account for different goals makes it easier to prioritize savings, track progress, and keep a record of contributions, especially when an individual is saving for multiple goals simultaneously.
Disadvantages to Having Multiple Accounts
According to Sofi experts, the answer to “how many bank accounts should i have?” depends on “your ability to balance organizing your finances with balancing your checkbook.” Some disadvantages of maintaining multiple bank accounts include increased instances of incurring fees and an increased risk of accidental overdrafts. It requires some advanced organizational skills and discipline to minimize these disadvantages.
An additional bank account can be a valuable tool for multiple reasons, but it’s not always necessary. Opening an extra bank account is just one of the ways people can take advantage of resources and improve their financial literacy. But most importantly, you need to find a reliable financial institution willing to address your concerns. So, start searching for the best banking services to gain maximum benefits.