How Many Checking Accounts Can You Have?

Article Summary

It is OK to have multiple bank accounts, checking accounts included. This article will tell you why having multiple accounts isn’t just OK but could be a good idea. It will also tell you the disadvantages of multiple accounts. If you have questions about having multiple accounts, you’ve come to the right place.

Having a checking account is one of the first steps in most people’s personal finance journey. They are an easy and convenient way to save, spend, and keep track of your funds.

Table of contents:

Most folks stick to just one account. But it is completely OK to have more than one, and you may even have a very good financial reason to open more than one.

In this article, we’ll dive into the logistics of having more than one bank account. We’ll discuss some reasons you might want to open a second account (or more than two). And we’ll examine the advantages and disadvantages of having one checking account vs. having more than one.

In other words, we’ll cover all the stuff you might have missed in that high school personal finance class!

How many bank accounts can I have?

The truth is, there is technically no limit to the number of bank accounts you can have. At least for checking accounts and savings accounts, that is. Credit cards, mortgages, and other types of loans are a different story. When you open a checking or savings account, the bank may ask you if you would like to open multiple bank accounts for different purposes.

Having one checking account and one savings account is common

Most checking accounts do not earn any interest. So it makes sense to keep enough money in one to cover monthly costs and put the rest into other places. This could include investments, property, or other assets that will appreciate over time. It could also include a savings account.

You use a savings account to store money away and have it grow over time. The annual interest rate tops out around 0.40% these days, though a few online banks might offer a bit more. You can use the funds in a savings account in a few different ways.

What are the purposes of a savings account?

Some people like to use it to save up for a large purchase. This could include a family vacation or a down payment on something like a car or a boat. With a consistent recurring deposit, they can predict when they’ll have enough money. Others might save for retirement, using the money to supplement their retirement investments.

Still, others keep money in a savings account as a form of a safety net. It may ensure they have enough to cover their expenses should they lose a job. Or should they need to pay either a home or auto insurance deductible? Or have a medical emergency. Finally, some might use the balance in a savings account to store money for their families. Should a family member have an emergency or other unexpected expense, these funds could be critical.

Why have multiple checking accounts?

Having multiple checking accounts is less common than having multiple savings accounts. But there are still valid reasons to do so.

One reason might be to set up joint bank accounts for members of your family too young to have their own accounts. Because many bank accounts offer online banking, such joint accounts have an added benefit. With them, you can monitor all of your children’s spending activity online for free.

Another reason might be to “bucket” your money into different spending accounts for budgeting purposes. This is especially useful if you plan to save up for large purchases, like a vacation. You might have a “vacation” account that you only use to pay for vacation-related expenses.

Further, this is common among spouses. Spouses may have both separate accounts and a joint account. They use their separate accounts for personal spending. And they use the joint account to cover things like groceries, entertainment, and transportation.

In the end, this is mostly a matter of preference. There is no right or wrong way to set up your account(s). Check out the pros and cons later in this article for more information.

Here is a quick look at some of the best checking accounts of 2021.

Why have multiple savings accounts?

For some people, personal organization is central to their finances. So it makes sense for them to open separate savings account for each type of potential expense. For example, they might open one for medical emergencies and one for a large purchase.

Each of these savings accounts is a separate “bucket” where they can see the money for that purpose grow.

This makes it easier to track the total amount of money available for each purpose. No more need to perform mental math on one large total. They might even name their savings accounts after the different purposes.

Example

Let’s consider an example. Bob wants to save for a down payment on a car and protect his family in case of an emergency at home. He also wants to be covered in case of a short-term job loss or similar difficulty.

In this case, he might open separate savings accounts for each of those causes. Let’s imagine he needs the following:

  1. $1,000 to cover the deductible on his home insurance.
  2. $15,000 to cover 3 months’ worth of his salary.
  3. $10,000 to make a down payment on his new car.

Bob might create many bank accounts to make sure he has the funds to reach each of these financial goals. This would be easier than tracking one large lump sum in one savings account.

PROS AND CONS OF HAVING MULTIPLE BANK ACCOUNTS

There are some definite advantages and disadvantages to having several bank accounts. Check out the list below to conduct your own comparison and figure out what is right for you.

Pros
  • Allows you to “bucket” your money and clearly see how much you have dedicated to a given cause or purpose.
  • Each bank account is free to open.
  • Each account is free of any fees or service charges (most of the time; check with your specific bank)
  • You can segment money toward checking accounts, savings accounts, and investment accounts. This allows you to maximize overall return and spread risk around.
  • Each account comes with its own debit card.
  • Each account is FDIC insured.
  • Keep income safe and secure.
  • Able to make withdrawals from branches or ATMs.
  • Helpful for those who frequently travel to have access to ATMs all over the country.
Cons
  • Difficult to maintain all of the login information.
  • Difficult to maintain all of the debit cards.
  • Different banks have different rules and fine print.
  • May go below the minimum balance in an account, depending on the bank’s rules and guidelines.
  • Could incur fees for going under the minimum balance on separate accounts.
  • It may be difficult to transfer money between accounts.
  • Could incur monthly service fees, depending on the bank.
  • Difficult to see your total balance all at once.

Consider a money market account

Money market accounts are a best-of-both-worlds mixture of a checking and savings account. Most of these types of accounts earn higher interest, so your cash will grow over time.

They generally come with no monthly fees and are very relaxed when it comes to other types of charges as well.

However, there is an important differentiator from a savings account. You can spend and withdraw money from the account just like you would from a checking account.

Many popular banks offer this type of account, including Discover, for example. If you want a hybrid between checking and savings and only want to keep tabs on one account, this may be the perfect option for you.

Checking account vs. savings account

As we’ve noted, there are some key differences between checking and savings accounts. In this section, we’ll dive into those differences. What types of situations would each account be best for?

Functions and purpose of a checking account

A checking account is what most people refer to when they use the term “bank account.” It is the main hub of their financial life and the account that they do the most spending out of.

It is also likely where most or all of their monthly paycheck gets deposited. With this type of account, you can transfer money digitally, withdraw cash from an ATM, and spend directly from your debit card.

You can also make as many deposits and withdrawals from the account every month as you desire. This gives you the added benefits of flexibility and choice.

The bad news, though, is that checking accounts won’t help your money grow in the long term. This is because the money in your account does not earn interest — or earns very little. Though “interest checking” accounts exist, they typically pay one-tenth the interest of savings.

Functions and purpose of a savings account

A savings account is more for saving for personal goals and helping your money grow over the long term. While the interest rates on these accounts are modest, they’re still better than nothing.

Think of a savings account as a digital piggy bank backed by the FDIC and its deposit insurance. You can deposit money repeatedly in the short term and watch it grow over time.

However, a savings account can be somewhat limiting. This depends on the bank. Some have a minimum balance that must be maintained, such as $15,000.

Others limit the number of transactions you can make in a month. This also depends on the bank, but the number is typically around 3–6 before you incur a fee or penalty.

Savings accounts also allow limited access to your money. You can’t spend out of them like you would be able to with a personal checking account. You can only access your money by visiting a branch or making a transfer to an eligible account online.

This can make it difficult to effectively manage your money and make sure it goes where you want it to go.

Key points to remember

  • Having more than one checking account is OK.
  • There are pros and cons to having multiple accounts
  • Remember to avoid fees and minimums
  • Savings and money market accounts can also be beneficial

Frequently asked questions

Which type of account gives me faster access to my funds?

A checking account. It allows you to withdraw, transfer, and spend money much faster than you could with a savings account.

Depending on where you live, you can also access your money through ATMs and branches, not just online.

Should I have multiple investment accounts?

Perhaps. Do you like to “bucket” your cash for different purposes? If so, you can use multiple investment accounts as “buckets.” But keep in mind that it may become difficult to manage all of these accounts. If you have someone manage them for you, plan to typically pay about a 0.40-1.50% fee.

Can I use a savings account to prepare for retirement?

Yes, but it probably isn’t the best way to do so because your funds will not grow much. Instead, consider a retirement account with a financial institution focused on retirement planning.

Is it bad to have multiple checking accounts?

No, having multiple checking accounts is not bad! It can be a little confusing to keep tabs on all of them, but it won’t be a problem if you are organized.

Can you have two checking accounts at the same bank?

Yes. Some people have multiple personal checking accounts that they’ve cosigned for a spouse or child. Others may have a business and personal account. Still, others may have multiple accounts for various purposes.

How many checking accounts should I have?

We recommend having one account for the sake of ease and simplicity. Then, you can add more savings accounts to cover whatever categories you would like to save funds for.

Can I have 5 bank accounts?

Yes. As long as you can maintain and keep up with them, it is fine to have five or more accounts. These could be accounts at separate banks. Or they could all be at the same financial institution. Some banks, like Goldman Sachs’ Marcus, will prompt you to create multiple accounts during the signup process. This makes it very easy to do if that is something you are interested in.

Conclusion

Having multiple bank accounts has its advantages. What are your goals? If you want to get your finances better organized, consider multiple savings accounts. If you want to get your kids accounts that you can monitor, consider joint checking accounts. Even multiple investment accounts might be right for some people. These are just three possible uses of multiple accounts. This article has surveyed several others. Why not start looking into your options right now? Read bank account ratings and reviews and choose the best option(s) for you.

Article Sources
  1. FDIC Insured Deposits — FDIC
  2. Is there a limit on how much I can deposit into my savings account — Consumer Finance Protection Bureau
  3. Checking and savings accounts: How to make them work — SuperMoney
  4. Best High Interest Checking Accounts – SuperMoney