In many families, there may be the need to have multiple bank accounts to manage the flow of all financial activity. With multiple checking and savings accounts, everyone in the family should consider what type of account is right for them. For instance, keeping all of your money in just one account may cause you to miss out on benefits offered with specific types of accounts. There are several pros and cons to having more than one bank account, but there is no one-size-fits-all answer. The choice should be made by weighing some of the following pros and cons based on your individual situation.
Pro: Manage different expenses and savings.
Having multiple accounts can really help organize and manage different expenses and savings goals. It is much easier to keep track of different expenses when your money is separated into accounts intended for specific purposes. This is also true for helping set savings goals. For example, one savings account could be holiday and birthday gifts, another could be for a down payment on a home, another for a vacation, etc. Knowing how much you need to save for each goal is easier to track with multiple accounts. This is made easier by setting up recurring transfers, so that a certain amount transfers into another on specific dates of each month or every so many weeks.
Con: Multiple accounts can be confusing.
Even for the most organized people, having too many accounts could get confusing. It can be difficult to keep track of what money goes where, how many accounts there are, and the different interest rates and account details. If you aren’t the organized type and don’t need the separate accounts, they might not be the best option.
Pro: Several features and perks can be picked.
Rather than sticking with one type of account or one bank, having multiple accounts allows for picking the best benefits for your situation. Mix and match the best interest rates, withdrawal limits, fees, points, and more. If you can’t pick just one account or bank, try using a few. When meeting with your financial institution take time to explain all of your financial goals. They may be able to recommend the account that best suits your needs.
Con: Less interest earned and more fees.
By splitting your money up into multiple accounts, you may earn less interest than if the whole sum was in one account with a higher interest rate. Some of the other perks may not make up for the lost interest, and this can be further exacerbated by the fees some banks have for higher end accounts. Paying an annual fee may not be worth it for the average person. It is best to weigh all of the options that are presented and also make note of when fees may happen and avoid these instances.
Pro: Protect more through FDIC coverage.
FDIC insurance covers most accounts up to $250,000 per depositor, which is more than enough for the average person. However, for anyone needing to keep more than that in the bank, they would need multiple accounts in order to keep their assets safe. This can actually be done by making multiple accounts at the same bank, or across different banks.
Con: Many banks have minimum balances.
Different accounts have different minimum balances, and if the funds in an account go below that amount they may be penalized. This could be losing benefits like interest, being charged overdraft fees, or the account being closed. Keeping the balance above that minimum can be difficult when funds are split up across multiple accounts.
When considering the savings and checking accounts may be best for you and your family, be sure to take the time to understand the benefits and the drawbacks that each may have. As your financial goals change over time, enlist the help of your local banker to assist you in a formal review.
Share this Post