The Pros and Cons of Multiple Bank Accounts

7 Jun

When it comes to money, some like to keep it simple, whereas others prefer to get as much out of their bank(s) as possible. Having more than one or two bank accounts is pretty common these days, and with on-the-go mobile banking and direct transfers available, it’s now easy than ever to manage this. But just how beneficial is it to have lots of different accounts? And what type of accounts should you be looking into if you want to do it?

Savings Accounts

Having multiple savings accounts is quite common, as people like to save for different reasons and for different lengths of time. Some accounts may allow you to have easy access to your cash, whereas others will ‘lock in’ your money for a predetermined period of time. Which is best for you depends on how much you have, what you’re saving for and when you’re likely to need it.

Pros

Some people find that having spate savings accounts can help them to keep track of goals better. For example, if you’re saving for a few different things you could have an account for emergencies, one for the holiday fund and another for a house deposit. This way, you can keep track of what’s in each account and delegate funds according to the importance of the cause at the time.

Having an emergency fund in a relatively low interest, but easy access account is paramount so that you can get hold of the money easily. Conversely, putting money for a house deposit into a higher interest account which restricts withdrawals for a number of years can also be beneficial (providing you’re not planning to buy within the time limit for withdrawals).

Cons

For some people, having multiple savings accounts can lead to confusion and potential loss of money. This is because, when there are too many accounts to handle, people are reluctant to move them to preferable rates or to make sure they’re kept up to date. Some people may forget that they have certain accounts at all, meaning money is effectively ‘lost’.

Current Accounts

Multiple current accounts are probably not as common as multiple savings, but they exist nonetheless. Some families prefer to have different accounts set up for different purposes, much like with savings, except the reasons tend to be more immediate, like bills and spending money.

Pros

Having multiple current accounts can be great for those who need a bit of help when managing their money. An account designated for spending and one designated for bills and direct debits can mean that it’s easier to see what’s available, preventing unauthorised overdraft use and overspending.

Cons

Some banks have a condition in which you must pay a certain amount in each month in order for the account to remain free. By having multiple accounts, it can be difficult to meet these requirements, especially if you’re on a low income. For those who bank with fee-charging institutions, you could be forking out a lot of money each month if you have to pay for a handful of accounts.

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