3 Perks of Multiple Bank Accounts, and 2 Potential Costs
Most of us have the banking basics down. We know a checking account is non-negotiable, and we can usually tell a debit card from a credit card. But ask about juggling several accounts and the confusion sets in fast. Do you need more than one? Is it genius or a headache?
The answer depends on your situation. A second account can protect your money or quietly rack up fees you didn’t need to pay. We asked personal finance experts when multiple accounts are worth it, and when they’re just one more thing to track.
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Pro: You Have a Backup Account If One Is Hacked
Identity theft has been a thorn in the banking industry’s side for years, and it’s getting harder to stop as technology gets smarter and more accessible.
A backup bank account is one of the most practical defenses you can have. If a hacker gets into one account, you still have another to pay bills and move money while the problem gets sorted out. Of all the reasons to open a second account, this one matters most when things go wrong.
Pro: You Keep Emergency Savings Separate From Routine Spending
A dedicated emergency savings account can help you stick to your budget. Keeping that money in its own account also makes it feel like a separate reserve, not spare change, which makes it less tempting to dip into.
Think of your checking account as your “bills” account rather than a catch-all for bills and savings.
“A ‘bills’ account and a savings account can make it easier to see what is available to spend,” said S. Brandon Kress, vice president of exchange services at i1031, LLC. “The benefit comes from a clear transfer schedule and enough cash to cover automatic payments, not from the number of accounts itself.”
Pro: Some Loans Require a Specific Bank Account
If you’re shopping for a mortgage and a car loan at the same time, a separate account could open doors to options you’d otherwise miss.
“For example, you may want a car loan through one institution, but they require you to have an account,” said Melanie Musson, insurance and finance expert at Clearsurance.com. “Opening an account may be worth it for a better loan option.”
Con: Bank Fees Can Eat Your Savings
Juggling several accounts at banks with minimum balance requirements can trigger fees that cancel out whatever you were trying to gain.
“Splitting a modest balance can cause several accounts to fall below minimum-balance requirements,” Kress said.
Con: High APY May Come With Monthly Deposit Strings Attached
Many high-yield savings accounts (HYSAs), the kind you should be using for your emergency fund, require a set monthly deposit to earn the top APY. That’s a nice perk until a tight month turns it into a source of stress.
Plenty of people struggle to build an emergency fund at all, let alone top it up every month, so this requirement can be a real hurdle rather than a bonus.
One Size Doesn’t Fit All
Whether a second account helps or hurts depends on your financial picture: your balances, your bills and how well you can keep track of the details each month.
"What can be considered a smart move for one person isn’t a smart move for another, based on your individual financial circumstances,” said Kelly Brown, founder and CEO of Ampersand.” It’s never a bad idea, if you have questions, to stop by your local community bank and sit down with a banker to chat about options.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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