How Many Bank Accounts Should I Have?

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Updated on Tuesday, February 26, 2019

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Maintaining bank accounts is a bit like juggling. When you have just the right number, everything’s seamless. But add one too many, and it all comes crashing down.

The trick is to find that sweet spot: How many balls… or in this case, bank accounts should you juggle? While there’s no one-size-fits-all approach to money management, here’s some advice on figuring out the right number of bank accounts for your needs.

How many bank accounts should I have?

When it comes to deposit accounts, you have a few different options to choose from. Each has its own purpose, pros and cons. Here are some accounts to consider:

Checking Accounts: Checking accounts are typically used for daily spending, like debit card transactions, online bill payments and checks. Interest rates on checking accounts tend to be low or nonexistent.

Savings Accounts: Savings accounts are considered a safe place to store money for a goal or an emergency. There is a limit of six withdrawals per statement cycle. Savings accounts usually offer higher interest rates than checking accounts.

Certificate of Deposits (CDs): CDs are a place to stash away money for a set period of time, anywhere from three months to several years. The interest rates are typically higher than checking and savings accounts, but you may pay a penalty if you withdraw your money before the CD term ends.

Money Market Accounts: This type of account allows customers to make between three and six transfers, debit card payments or check payments each month. Money market accounts may have higher interest rates than traditional checking and savings accounts.

If you have one of each of the main basic deposit account options, then the easy answer would be three or four accounts is the ideal number of bank accounts to have. That way, you’re maximizing the cash you have on hand so you’re not missing out on potentially more flexibility or higher returns. You can keep cash for day-to-day spending in checking, put a healthy amount of savings in your savings account for emergencies or short-term financial goals, and sock away additional savings in a CD. Consider a money market as an alternative to savings if you can find one that offers a really competitive rate.

“It’s important to have the basics. I recommend having a checking account and perhaps a money market fund or a CD, depending on which pays a higher interest rate,” said Lou Stanasolovich, a Certified Financial Planner and president of Legend Financial Advisors, Inc..

That combination of accounts would give you the ability to deposit paychecks (or receive direct deposits), pay bills, make transactions and earn interest on your rainy day fund.

5 Reasons to open multiple bank accounts

There are many compelling reasons to open additional accounts. Perhaps you have a daughter who’s heading off to college and you need an easy way to give her money for books and food, so you decide to open a joint checking account. Or maybe you’d like to save up for a dream vacation and you want to separate your travel fund from your general savings — a new savings account might make sense for you.

Personal finance is, well, personal. Strive to strike a balance between having enough bank accounts for your needs and goals, but not so many that it makes managing your finances a headache. Only you can decide what the right number of bank accounts is for your life.

Here are a few reasons opening several accounts can make sense:

  • You need to organize various savings goals: Are you saving for a few different goals? While some people like stashing all their savings in one place, others prefer to divvy up their money into multiple accounts for specific goals. You may be able to open several savings accounts with the same bank, so they’re are all in one place.
  • You’re keeping too much cash in checking. If you’re stashing all your savings in a basic checking account beyond what you need for daily expenses, you could be missing out on higher returns. Some online savings accounts carry APYs of 2.00% or higher these days, and CDs offer competitive rates on long-term savings as well.
  • You have high balances and want to maximize your FDIC coverage: The Federal Deposit Insurance Corporation (FDIC) insures up to $250,000 per person per account. If you have a higher balance than that, dividing it into multiple accounts ensures that all your money’s covered in the event of a bank failure.
  • You withdraw money often: Need to withdraw cash from your savings more frequently than six times a month? You might need multiple savings accounts to avoid withdrawal limits and potential fees.
  • You want a back-up account: Earlier this month, an outage at Wells Fargo prevented many customers from accessing their accounts. Keeping some money in another account could serve as a backup if your primary bank has an outage.

The pros of keeping it simple

Keeping the number of accounts you have open to the bare minimum can make it easier to track your finances, so think carefully before you go on a deposit account shopping spree.

“When you’ve got money in multiple places, it can become a management problem and money starts getting ignored,” warned Stanasolovich.

To make managing several accounts easier, sign up for a free service like Personal Capital or Mint.com.

  • Lower likelihood of fees: “One of the main reasons I’m not in favor of people spreading their money into many accounts is because they may get hit with minimum balance fees,” said Stanasolovich. Having a low number of accounts allows you to pay closer attention to your balances and potentially avoid fees.
  • Managing money is easier: When you’re storing your money in just a couple places, it’s a lot easier to keep track of it.
  • Faster transfers: If you have a checking and a savings account at the same bank, you can often transfer money between the accounts the same day. Transfers between multiple accounts at different banks may take longer, unless you take advantage of programs like Zelle.

Conclusion

When it comes to the ideal number of bank accounts, there’s no one right answer. Regularly review the number and types of accounts you have to make sure they’re serving your financial goals, and don’t be afraid to switch banks or open a new account when the situation calls for it.

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