How many bank accounts should you have?

How many bank accounts should you have? The answer to this question is, however many bank accounts you need to help you achieve your specific financial goals and desired lifestyle. Do keep in mind that you don't want too many to manage as it may become a hindrance. Potentially there are some advantages that may come with holding multiple bank accounts - along with some drawbacks. Let's take a look at what having multiple bank accounts might do to help you achieve your financial goals.

Bank accounts to consider

Bank accounts come in many flavors. Some are specialized and cater to specific purposes, like retirement or education. While those accounts can be important to personal finance too, the foundation of personal financial management boils down to the banking basics — like your standard-issue checking, savings and CD accounts.

Checking accounts

For many people, a checking account is the front door to their finances. Designed for flexible spending, it’s where most of their funds are deposited and withdrawn. Can you have multiple checking accounts? The answer to this question is, it depends as some banks may limit the number of checking and savings accounts opened at the same time. Particularly, if it's the same type of account. Check with your bank to verify if they have restrictions on the number of checking and savings accounts you can open.

While many people hold a single checking account, it may make sense to open a second checking account and designate them for different purposes. For example, keeping one checking account for routine expenses and another for discretionary spending may help with budgeting and expense tracking.

Saving accounts

A savings account is designed for longer-term storage of funds and may come with monthly withdrawal limits. Savings accounts are, however, often used without a specific goal or intention beyond general savings. This means the money for your emergency fund, specific savings goals and any general surplus are all stewing in the same pot.

So, when deciding "How many savings accounts should I have?," it may be helpful to think of multiple savings accounts like multiple piggy banks, change jars or envelopes. Holding multiple savings accounts for specific purposes may help prevent spending money earmarked for another purpose and may help simplify tracking your goals. This might look like keeping an emergency fund in a savings account that facilitates last-minute withdrawals and your savings for a large, long-term purchase in another.

CD accounts

Certificate of deposit accounts, or CD accounts, are specialized savings accounts that earn interest for a fixed period of time and have penalties for early withdrawals. Some people spread equal amounts of money and deposit them into multiple CDs with varying maturity dates. This creates what is called a CD "ladder" that allows them to take advantage of long-term rates while maintaining shorter-term access to some of the funds.

Advantages and disadvantages of multiple bank accounts

Multiple bank accounts can be a powerful tool for financial management, but it’s not for everybody. When determining how many bank accounts you should have, it may be helpful to think through a cost-benefit analysis of how they might help or hinder your personal financial goals.

Potential benefits

• More options: Researching the different types of bank accounts may help you understand the larger selection of banking options to choose from. This may help you identify a more specialized account that could align better with your financial goals.
• Improved budgeting: Budgeting, expense tracking and saving can be better supported with clear divisions and earmarking. Keeping multiple accounts can make it easier to measure progress toward individual goals and may help prevent overspending or dipping into funds for other goals.
• Increased flexibility: Keeping multiple savings accounts can help reduce potential monthly withdrawal limits, if your bank has this restriction. When nearing the limit of one account, it’s possible to lean on another for last-minute spending.

Potential cautions

• More financial upkeep: Though potentially useful for budgeting, saving and expense tracking, having multiple bank accounts may require more attention than just one checking account and one savings account. It also may mean more debit cards to handle. For some, the juice may simply not be worth the squeeze.
• Higher minimums: More bank accounts can mean more minimums to maintain. This can be difficult if you find yourself strapped for cash and could potentially result in fees and other penalties.

Common questions

Let’s examine key questions many customers have when deciding whether or not to open multiple bank accounts and dispel some misconceptions.

Can you get in trouble for having multiple bank accounts?

How many bank accounts can you have? There is no limit on the number of bank accounts, whether they’re checking, savings or any other, an individual can hold.

How many bank accounts is too many?

Like we shared above, the question of how many bank accounts is too many varies per person. For some, a checking account and savings account is all they will ever need. Others, however, may derive real benefit from holding multiple savings accounts or multiple checking accounts.

In summary

There is no hard answer when it comes to how many bank accounts you should have. It largely depends on what suits your lifestyle and personal goals best. Holding multiple bank accounts might provide real advantages. Conversely, holding multiple bank accounts can come with extra obligations, like more account minimums to consider.