What Is the Appropriate Number of Bank Accounts? Oak Park Financial


Depending on your financial objectives, you may discover that maintaining several bank accounts makes sense.

However, there are no optimal amount of bank accounts to maintain. The trick is determining which mix of funds best fits your financial objectives and lifestyle quick payback.

Here’s how to assess which bank account combinations will provide you with rapid access to cash while also allowing you to make the most of your reserve dollars.

Justifications for Multiple Bank Accounts

While having just one bank account may seem to be more accessible, there are certain instances where having several bank accounts makes sense:

  • Budgeting. Budgeting with various bank accounts may prove more manageable than a single charge. Multiple accounts enable you to segregate your spending from your savings and your family income from your earnings.
  • Keeping track of savings objectives. Having different bank accounts may make it easier to follow individual financial dreams.
  • Economic segregation. Multiple bank accounts may allow spouses and domestic partners who wish to divide family resources to spend and save in a manner that works for their relationship.
  • You are raising financially savvy children. By opening a joint bank account with one of your children, you may help them develop healthy money habits, such as budgeting.

Whatever your motivation for having numerous bank accounts, you’ll want to start small and add tabs in a method that makes financial sense for you.


Begin By Examining

Your checking account serves as the entry point for your monthly financial transactions. This is the account into which your paycheck will be direct deposited, and you will use the debit card associated with this account to pay for most of your daily costs.

Your daily checking account may provide you with perks for your everyday purchases. With so many banks vying for your business, you can choose between brick-and-mortar banks with local branches near your house and online banks.

Ascertain that your primary checking account has features such as mobile and internet banking, a low minimum starting amount, and reasonable monthly costs. Numerous banks remove monthly account fees if you get your paycheck through direct deposit or maintain a minimum amount. Many online banks provide additional perks with checking accounts, such as ATM fee reimbursements and canceled overdraft fees.

The main purpose of your primary checking account is to keep the funds you’re most likely to require during the month within easy reach.

Then, consider opening a second checking account to accommodate particular financial objectives.

When Might a Secondary Checking Account Be Appropriate?

Adding a second checking account to your financial portfolio may be the farthest thing from the top of your priority list. Nonetheless, it makes sense in a few limited circumstances, such as monitoring company revenue and spending and ensuring that you have access to your money.

If you’re a solopreneur or small-company owner, separating your personal and business funds simplifies accounting and taxes. A second, distinct checking account might be the deciding factor.

Even if you are a single owner, you may open a separate checking account to receive and pay company payments and expenditures. Using a different checking account may also simplify paying quarterly estimated taxes since you’ll get a consolidated view of your business’s revenue and spending.

Adding a second checking account might assist you in budgeting by separating your company and personal costs. You may need to develop a budget that takes swings in your company revenue into account, mainly if you are self-employed. By logging into a single charge and seeing all of your business’s costs, you may immediately identify areas where you need to cut down or change spending during months of lower revenue.

What Is the Appropriate Number of Checking Accounts?

There is no clear and fast rule about the number of checking accounts you should maintain. The optimal number is the one that enables you and your family to access your finances and keep track of your expenditures conveniently. Too many accounts may make both of those activities more difficult.

Increase your savings potential by adding a savings account.

Savings accounts are an integral part of any healthy financial plan.

As many checking accounts generate no interest, savings accounts do, and they allow your money to collect interest while you go about your daily life. You may open a savings account at the same bank as your primary checking account, or you can explore the several popular online savings accounts. Online savings accounts often provide far greater interest rates than traditional banks, making them an excellent alternative for increasing your funds.

You may choose to maintain several savings accounts for just this reason—to facilitate the transfer of funds from a low-interest account to a higher-yielding account. However, if you consider opening second savings account to take advantage of the greater returns given by online banks, keep the downsides in mind.

Many online banks have a delayed funds transfer delay, meaning money transfers between banks will take time. You’ll probably want to maintain your emergency funds in a savings account that transfers quickly to your immediate checking account. Your secondary savings account may then be used to accumulate financial reserves.

What Is the Appropriate Number of Savings Accounts?

Multiple savings accounts might assist you in saving for specific purposes. Numerous banks provide branded savings accounts, such as vacation and Christmas-themed accounts, that may be used to save money throughout the year in addition to your emergency savings. You’ll want to keep an eye on the rates given on these specialist accounts to ensure you’re earning a possible interest on your money since online savings account at another institution may generate a substantially greater yield.

Increase your savings by adding a money market or cash management account.

If you’re dissatisfied with the lack of interest in your checking account balances, try adding a money market or cash management account to your banking toolkit.

While many ordinary checking accounts do not pay interest, money market and cash management accounts do. They provide check and debit card capabilities and earn interest on your assets. Because the two versions operate differently, it’s essential to understand how they function to determine which is a better match for your money.

Accounts Monetary

Money market accounts (MMAs) combine the features of checking and savings accounts. They are similar to bank accounts in that they often provide debit and check writing facilities. A money market account may be the best option if you’re looking for a balance of interest earnings and liquidity.

Accounts for Cash Management

Cash management accounts, primarily available via online brokerages, operate similarly to checking accounts. You’ll have check-writing and debit card capabilities and the ability to make limitless monthly transactions. Cash management accounts may have additional perks not available with money market accounts, such as ATM fee reimbursement, cashback incentives, low to no minimum balance restrictions, and other “member” benefits, depending on the issuer.

Multiple Bank Accounts: How to Manage Them

You’ll manage numerous bank accounts the same way you would order a single one, from balancing your account to adhering to a budget.

However, there are a few recommended practices to bear in mind when you grow your portfolio of bank accounts:

  • Utilize the appropriate debit card. You’ll want to ensure that you’re paying with the correct account for the right items, whether in-store or online.
  • Respect your objectives. Even if you have many accounts, they all operate in concert to assist you in achieving your financial goals. Poor practices in one account might have a detrimental effect on all of your funds.
  • Create a set of standard rules. Joint account holders might benefit from a common set of rules governing how money is used. Communication is critical to the success of jointly owned accounts.

The Advantages of Having Multiple Bank Accounts

By combining accounts, you may make your money work harder for you. The following are some of the advantages that are having numerous reports may provide for your finances:

  • They increased interest rates. Customers of brick-and-mortar banks may take advantage of the higher interest rates available on internet savings accounts. Regular checking account holders might benefit from moving to an online bank’s cash management account.
  • Savings accounts for specific purposes. You can stay on track with your savings objectives by automating transfers from your checking account to a savings account of your choosing, earning the most return possible on your money each month.
  • Improved liquidity. While interest-bearing accounts such as money market and savings accounts may levy penalties for exceeding a certain number of withdrawals per month, an online checking or cash management account may allow you to earn interest while maintaining ongoing access to your assets.

When adding new bank accounts to your financial portfolio, aim for the most considerable interest rate available while keeping an eye on minimum balance requirements and monthly fees. Add funds that help you reach your savings objectives, and keep in mind the costs associated with adding or changing accounts, such as new debit card numbers and automatic payments that will need to be switched over.

Cons of Having Multiple Bank Accounts

Despite the many advantages of having various bank accounts, there are some reasons why this strategy may not be optimal for your financial situation:

  • Additionally, there are other accounts to reconcile. Each month, you’ll need to keep track of more than just a checking and savings account at your neighborhood bank, which might be perplexing.
  • Balances at a minimum. Numerous accounts have minimum balance requirements to receive interest. Ascertain that you are capable of meeting these standards.
  • Increased fees. By splitting your funds, you may fall short of the required minimum level to avoid monthly penalties.

Multiple bank accounts may not be the most outstanding choice for your money and lifestyle if you’re searching for simplicity. In this instance, you might investigate the possibility of opening a simple checking and savings account at the same institution to meet your monthly spending and savings objectives.

The Verdict

If you’re organized and don’t mind doing some research, having multiple bank accounts may benefit you in the long run, as long as your financial goals are met. Whether you maintain one or more bank accounts, constantly examine the fees and minimum balance requirements for all available alternatives and save an emergency fund in an easily accessible account to deal with life’s unforeseen occurrences.


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