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Why You Should Have Multiple Bank Accounts

Introduction

Banks offer a variety of accounts that provide different features. While it makes sense to use a checking account for your everyday money management, it’s a good idea to have multiple types of bank accounts to make the most of your money. Here’s why it makes sense to have multiple bank accounts and which ones to consider.

4 Reasons to Have Multiple Bank Accounts

Earn More Interest

Most checking accounts don’t offer interest on your balance, and if they do, the interest rate is near zero. Adding a high-yield savings account to the mix can help you earn more on the cash you don’t need for immediate financial needs. If you can afford to lock up some funds for a longer period, you could earn even more with a certificate of deposit.

Get More Insurance Coverage

The Federal Deposit Insurance Corp. (FDIC) insures up to $250,000 per bank, per depositor, per ownership category. If you’re in the fortunate position to have more than that in the bank, getting an account with another bank increases the total amount of insurance protection you receive.

Be More Effective With Savings Goals

If you have different savings goals, it could make sense to open high-yield savings accounts for each one. That way, you can track each goal individually, making it easier to stay organized and know where you stand.

Share Finances

If you have a spouse or partner, but you don’t want to share all of your finances, it could make sense to have individual accounts for you and joint accounts with your loved one. This approach can help you better manage your money in a way that works for your relationship, including both individual and shared financial goals.

Types of Bank Accounts

Bank account options can vary with each bank, so if your bank doesn’t offer all of the accounts you want, you may need to switch to a different bank or maintain accounts with two financial institutions. Here are the most common types of bank accounts:

• Checking account: Use this basic bank account for everyday money management, such as paying bills, writing checks, receiving direct deposits, and making purchases with your debit card.
• Savings account: A traditional savings account is great for stashing your emergency savings and short-term financial goals.
• High-yield savings account: Offers a much higher interest rate than a standard savings account.
• Money market account: Acts as a hybrid between a checking account and a savings account, often offering higher interest rates and the ability to write checks.
• Certificate of deposit (CD): Offers a high interest rate in exchange for committing your funds for a set period.

Benefits of Having Multiple Bank Accounts

There are several benefits to using multiple bank accounts. Depending on your situation, here are some to consider:

• Different accounts for different purposes: While a checking account is great for everyday money management, it’s not as well-suited to saving for the future as a savings account.
• Higher interest rates: High-yield savings and money market accounts can offer higher interest rates than checking accounts and traditional savings accounts.
• Take advantage of different benefits: In some cases, it may make sense to have more than one checking account or savings account to take advantage of different features offered by various banks.

Drawbacks of Having Multiple Bank Accounts

While there are some clear advantages to having multiple bank accounts, there are also some potential drawbacks to consider:

• Minimum balance requirements: Some banks and credit unions require that you keep a certain amount in your account to keep the account open or to avoid a monthly fee.
• Fees: It’s possible to find several bank accounts that don’t charge monthly fees, but if you choose banks or credit unions that do, it can get expensive fast.
• Organization: It’s important to stay organized if you have more than one bank account. Forgetting about a recurring payment could result in overdraft fees.

How Many Bank Accounts Should You Have?

Having multiple bank accounts can be beneficial, but how many you decide to have depends on your situation and goals. If you have several short-term savings goals, consider opening a savings account for each one to make it easier to track your progress.

Take your time to consider your situation, preferences, and goals to determine how many bank accounts are right for you. If you’re not sure, start with a checking account. Then, once you start building up some savings, consider opening a high-yield savings account to earn more interest on those funds while they’re parked.

What to Consider When Opening a Bank Account

Ultimately, the features you look for in a bank account will depend on the type of account you’re interested in. In general, consider the following elements as you research and compare your options:

• Monthly fee: These are more common with checking and money market accounts, but some traditional savings accounts may also charge them.
• Access to your cash: Find out how many ATMs each bank has in your area to determine how easy it’ll be to get cash when you need it.
• Annual percentage yield: As you compare savings, money market, and CD accounts, try to get an account with a high annual percentage yield (APY) to make the most of your savings.
• Balance requirements: Some bank accounts require a minimum opening deposit amount, as well as ongoing balance requirements.
• Other features: Some banks may offer other features that add more value to your banking experience, such as ATM fee reimbursements or the ability to create individual savings “vaults” in a single account.

Contact O1ne Mortgage for Your Mortgage Needs

If you’re looking for expert advice on managing your finances or need assistance with mortgage services, O1ne Mortgage is here to help. Call us at 213-732-3074 for any mortgage service needs. Our team of professionals is ready to assist you in achieving your financial goals.

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