How Many Bank Accounts Should I Have?

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Bank accounts can be used in several ways, and you may be wondering how many bank accounts should you have.

There’s no exact answer for everyone, and you can certainly have as many bank accounts as you want. What’s key is to figure out the correct amount of bank accounts for your individual situation.

In this article, we’ll discuss how many bank accounts you may consider having, some reasons why, how to organize those accounts, and the various pros and cons of having multiple bank accounts.

Let’s jump right in.

Typical Reasons to Have Multiple Bank Accounts

While some may opt to have a single bank account, such as a checking account, there are a few reasons why you might opt to have more.

Here are some common reasons to have multiple bank accounts:

• A primary checking account for your bills.
• A secondary checking account for discretionary spending.
• A primary savings account for your emergency fund.
• Individual savings accounts for different goals, such as a vacation or a house down payment.

Other reasons for having multiple bank accounts include that they allow you to budget better, track your goals, and help you separate your finances into buckets.

Primary Checking

A bank account that makes sense for almost anyone to open is a primary checking account. This checking account is used for paying your bills and receiving your paychecks.

This bank account could be online or a brick-and-mortar bank. If possible, it also makes sense to look for a bank that waives minimum balance requirements.

Other banks will refund ATM fees or monthly maintenance fees if certain conditions are met.

What’s primarily helpful about a primary checking account is that your money is at your fingertips if you need it immediately.

The drawback of putting all your money in a primary checking account is that you might be tempted to use your money on things you don’t really need, which can hurt your ability to save.

When Two Checking Accounts Might Make Sense

As mentioned, having all of your money in one place can make it hard to differentiate between things you need and things you want. 

In this case, a secondary checking account might be helpful. With a secondary checking account, you can store money that’s specifically used for discretionary spending. That is, things that you purchase for fun.

This includes going out to eat, video games, a trip to the mall, going out to the movies, and other types of entertainment.

Using two checking accounts promotes budgeting as you can budget for your living expenses in one account and your fun money in the other.

You’ll also want to consider budgeting for emergencies and various savings goals, which one or more savings accounts are good for. 

Savings Account for Emergencies

Life throws unexpected expenses periodically. This can be anything from a trip to the ER, a vet bill, a broken-down car, or a tax bill that was higher than expected.

An emergency fund cushions you from these expenses as you have the money on hand versus having to swipe your credit card and sink into debt.

Many checking accounts don’t earn interest, but savings accounts do. This is particularly true for high-yield savings accounts, which are commonly online.

You also may choose to have your savings account at a different bank than your checking account, as that creates a delay when you transfer money from one to another.

The reason you might want this delay is that it discourages you from transferring money from savings to checking and then immediately using that money on an impulse purchase.

Savings Accounts for Individual Goals

Besides having an emergency fund, you may consider having additional savings accounts for individual financial goals. Such goals could include money for:

• A down payment on a house
• A family vacation
• Upgrades around your home
• A down payment for a new car
• New furniture
• Holiday shopping

Some banks will allow you to make subaccounts from a single savings account. If this is the case, you could potentially only have one savings account and then create subaccounts for your emergency fund and each financial goal that you’re saving for.

How to Organize Multiple Bank Accounts

One way to manage multiple bank accounts is to create automatic transfers. For example, assume your paycheck is direct deposited into your primary checking account, which you use to cover living expenses.

Your living expenses might make up 40% of your paycheck, so you might to decide to leave 50% of your paycheck in your primary checking, allowing yourself a 10% buffer.

Now, you might transfer 25% of your paycheck to your discretionary spending checking account with an automatic transfer.

From there, you might decide to transfer 25% into savings, which you set 20% to your emergency fund and 5% to your travel fund.

This is a variation of the 50/30/20 rule where 50% of your paycheck goes to needs, 30% to wants, and 20% to savings.

Benefits of Having Multiple Bank Accounts

Having multiple bank accounts comes with benefits and drawbacks.

Some of the benefits of having multiple bank accounts include:

• Higher interest rates for savings: By putting your savings in a savings account, you can enjoy higher interest rates than typical checking accounts. Some checking accounts pay no interest at all, whereas high-yield online savings accounts tend to pay the most interest.
• Easier to organize your finances: You’ll have your money in different buckets, which allows you to save for multiple things at once while also budgeting for your expenses and discretionary spending.

Drawbacks of Having Multiple Bank Accounts

While there are two key benefits to having multiple bank accounts, there are a few drawbacks.

• More difficult to track everything: Going through each account every month can prove confusing. An app like Personal Capital can help, as this app can pull all of your transactions from every account into one place. Personal Capital is free to use, and they do also provide wealth management as an optional add-on.
• Dealing with minimum balances: Some bank accounts have minimum balance requirements, or else you’ll be charged a maintenance fee or not earn interest. You’ll have to keep more money across all of your accounts for this not to happen. The alternative is to find a bank or banks that don't charge maintenance fees.

Should You Have Bank Accounts at Multiple Banks?

Having bank accounts at multiple banks can be beneficial because it causes delays when transferring money from one bank to another. As mentioned earlier, this makes it harder for you to take money from savings and transfer it to checking to then impulse purchase something.

Things to Keep In Mind When Opening Bank Accounts

When you open a new bank account, be sure to read over the terms of the bank account. This includes minimum balance requirements, transaction fees, ATM fees, and the amount of interest you’ll earn.

Additionally, consider keeping track of your bank accounts with an app, a spreadsheet, or pen and paper. When you have several bank accounts, it’s easy to miss something if you’re not on top of things.

Wrapping It Up

For many people, a single bank account may not be enough. It may be helpful to have at least a checking and a savings account, and sometimes an additional checking account and other savings accounts.

While there isn’t a correct number of bank accounts for everyone to have, the number you choose will be based on your financial goals and your ability to stay organized.