Is it the Right Option to Have More than One Bank Account?

13 Jul 2020

Each one of us needs at least one bank account in which we deposit our paychecks. Some of us need more than one account to manage our money well. Into which category do you fall? There is no cap on the number of bank accounts you can operate, but is it good to have more than one bank account? It is the right idea to know the pros and cons of operating more than one account.

When we think of operating many bank accounts to suit our needs, the first question arises that are you allowed to have more than one bank account? It is legally permitted for all citizens to open as many accounts as they want.

You have to maintain at least one checking account so that you can deposit and withdraw at your convenience. Withdrawals can be made either by check or credit or debit cards. A checking account is also necessary for you to be able to compute your tax liability at the end of a financial year.

Why we need bank accounts?

Spend cash easily. Every individual needs a safety net in the form of savings. The best way to save is to write out your budget. You will find that you can shave off some of your expenditure to create this safety net.

If this money is in a bank, it earns you a return in the form of interest no matter how small.

 Types of accounts

Different kinds of accounts are available in the banking sector. It is necessary to choose wisely and according to your need.

Savings Account

This kind of account yields very low-interest. It is necessary to think if you need it.

Cash deposit accounts

These accounts give a better return in terms of interest to the client.

Joint Accounts

More than one person can operate these accounts. It is the right of every partner to access this account without seeking permission from the other partner/partners.

 

Why may you need more than one account?

Some people can handle all their money transactions with only one bank. Others like to bank with more than one bank. A different kind of person likes to operate multiple accounts in the same bank. We need to scrutinize our banking needs carefully to find out why.

Some of the reasons for using more than one account could be:

Different plans

Are you the kind of person who saves for different things at the same time? Then it might be useful to open multiple accounts for each of your plans. You can allocate some money to go into each separate account according to the goal you have set for that purpose. It will be easy to keep track of how close you are to achieving your target. The money could be earmarked from your check-in account.

Saving schemes

Some bank accounts offer attractive plans in which you save some money every time a purchase is made. This is a reason to open such an account for day to day spending.

Emergency fund

Do you find it difficult to stop yourself from spending everything in your account?  You should open a separate account to save money for emergencies. This account should not be touched except in times of a crisis.

Long term saving

Some of us like to keep aside a certain amount from every paycheck for payments that go out once a year. These could be your mortgage or the car insurance or an insurance premium.

Short term usage

It is easier to control your spending if you segregate your money, then you know at a glance exactly how much spending money you have in your account for day to day expenses.

Better perks

Many banks offer their clients better interest rates if they have multiple accounts. You can avail of this facility by opening different accounts in the same bank.

Banking constraints

Some banks put a cap on how many withdrawals you are allowed. If you are in the habit of withdrawing money multiple times each month, then it would be sensible to put your money in different banks for ease of withdrawals.

Instability of banks

You may feel nervous that the bank where you have your account could fail. In this case, it is better for your peace of mind to have accounts in different banks. It will be reassuring to know that if a bank fails, FDIC will ensure that you do not lose your money. The process takes time so you will not be able to access your money if you need it immediately. This could be a reason for you to bank with another institution.

FDIC stands for Federal Deposit Insurance Corporation. It ensures the common man against bank failure and encourages healthy banking practices.

An Account with a big balance

If you are insecure about your bank’s stability, you should put your money in different banks. The FDIC insurance cover for an account in a failed bank is capped at $250,000. If your account is likely to have more than that and you do not feel confident about your bank, you will be better off with spreading your money in different accounts and banks.

Reduced fee for multiple accounts

Some banks charge you a lower fee if you have multiple accounts. If you root for having more than one account, it may be a good idea to have multiple accounts in one bank to earn the privilege of paying a lower fee.

Why You May Not Want Multiple Bank Accounts

There are many reasons for not having multiple bank accounts at the same time.  Some of the reasons for not operating multiple accounts are as follows:

Minimum balance      

Almost all banks will expect you to maintain a certain balance as a quarterly average. You are obligated to do this if you want to earn interest. In case the minimum balance is not maintained, you end up paying a fine. If your money is spread out in multiple accounts, you may find it challenging to maintain the minimum balance, and if this happens, you could lose money instead of earning interest.

Higher rate of interest

Is your bank one of those which offers clients a higher rate of interest on a more significant balance? In this scenario, you may lose some money if you spread out your balance in different accounts. It is evident that having one account will show that you have a bigger balance than if the same amount is deposited in different accounts.

Confusion

When you have opened different accounts for different purposes and have set an amount to be allocated to each account each month from your paycheck, you will face a problem. It could be challenging to determine where to put that extra money which you receive as a gift or a bonus.

Using your check-in account

You can put your check-in the account for various purposes.

You can use this account to service your credit cards. Linking your multiple cards to your bank account is possible.

 You are also allowed to link one card to multiple accounts. A word of caution is needed. You may overshoot your limit.

Banks offer loans to their account holders. It lies within the purview of the bank to grant the loan. The bank will first assess your ability to repay your loans based on the balance in your account over a set period of time. Your credit score will also be used to assess whether you are a suitable client for the bank to grant a loan. The bank uses its discretionary powers to grant loans even though there are strict guidelines to be followed.

Can one have more than one Bank of America checking account?
Yes, one can have as many Bank of America checking accounts as one wants to in order to manage multiple transactions with ease.

Can you have more than one bank loan at a time?
If your credit record is right, you can be granted more than one loan if you require it. This is again in the hands of the bank. There is no binding for the bank to grant you a loan.

Can you have more than one bank account linked to Paypal, Venmo, Zelle?
Yes, you can link as many bank accounts with your Paypal, Venmo or Zelle account. However, there has to be one first bank account designated by you.

What if I have more than one student bank account?
There is no fault in having more than one student bank account. You can also have savings and check-in account along with your student account.

Can you have more than one Bank of America Credit card?
Yes, Bank of America allows its customers to get more than one credit cards issued.

Opening and operating bank accounts are not difficult tasks. In some cases, there is a dire need for multiple accounts whereas in other people can manage very comfortably with one account. Your spending habits should be the guiding factor whether you should hold and operate single or multiple bank accounts.