How Many Bank Accounts Should I Have?

When you’re regularly paying bills and saving money, several bank accounts may make sense to reach financial goals more easily. You might find yourself asking how many bank accounts should I have and which is the best? 

Most people need at least one checking account and an account for savings or investing. These two to three accounts help with essential financial management, such as depositing and withdrawing cash, paying bills, making purchases, and saving or investing money. 

If you have several accounts, get organized by clarifying the purpose of each account. While having more accounts to meet different goals is typically beneficial, managing them can be overwhelming.

Table of contents

• When should you have multiple accounts?

• Why do you need more than one bank account?

• Different types of bank accounts

• How to determine how many bank accounts you should have

When should you have multiple accounts?

Consider having multiple bank accounts if each serves a different purpose or helps you achieve your financial goals. For example, consider a checking account for everyday income and expenses. A high-yield saving account can be a good place to keep your emergency fund or short-term savings while earning some interest. 

Some families will choose to have several checking and savings accounts for different purposes. For example, you might have a checking account for business-related income expenses and for personal income and expenses, or each spouse may have their own checking account. Likewise, you could have one general savings account or a separate saving account for a specific goal, like a mortgage down payment or a special vacation. 

Times to consider multiple accounts:

• To save for specific goals

• To separate personal and business funds

• When you have more than $250,000 in a single account

• If each spouse wants a discretionary spending account

• When it’s easier to budget by creating multiple accounts

• When you want to maximize interest growth on savings accounts

• You want to save for retirement (with a 401(k) or IRA)

• You’re investing (with a brokerage account)

Keep in mind that each account might come with a monthly fee. Look for free checking accounts and high-yield, low-fee savings accounts to avoid spending extra on monthly fees. 

Why do you need more than one bank account?

The advantages of having several bank accounts include ease of management and diverse purposes. You might have one account for savings goals and another for everyday expenses. 

In reality, you could do everything with a single bank account, but having at least one checking account and one high-yield savings account can allow you to take advantage of these different account types. You might also need retirement accounts or investment accounts.

Advantages of multiple bank accounts include:

• Easy transaction tracking

• Reduced dependence on a single bank

• Separate accounts for savings and expenses

• Simplification of tracking and help in reaching savings, retirement, and investment goals

Different types of bank accounts

Different accounts may offer attractive features, or you may separate account purposes to manage your finances effectively. Here you’ll find information on other types of useful accounts. For example, you can organize accounts into long-term or short-term use. Separating accounts for different purposes helps you manage your finances more effectively. 

1. Checking account

A checking account is a basic bank account that lets you deposit and withdraw money for daily expenses. Checking accounts offer flexibility to deposit salary checks or transfer funds from a prepaid debit card. You can easily access funds using a debit card or by writing checks. Most checking accounts earn very little to no interest; if they do, the interest rates aren’t high enough to encourage saving. 

2. Saving account

Savings accounts encourage saving money and can be restricted by limited withdrawals. You earn a moderately higher interest rate in savings than in checking. Savings accounts aren’t typically used for paying bills. They do not come with a debit card or check-writing privileges.

3. High-yield account

A high-yield account may fit the bill if you aim to grow your savings faster. This type of savings account can pay far more than the standard interest rate on savings accounts. If you’re looking for high-yield accounts with the best interest rates, consider online banks and providers. Look for a high-yield savings account with 4% to 5% APY. 

MoneyLion offers a convenient marketplace to compare high-yield savings accounts from our trusted partners that could help grow your money. 

4. Certificate of deposit (CD)

A certificate of deposit is another type of savings account offered by credit unions and banks. It provides higher interest rates than a regular savings account but with more restrictions on the money deposited. You agree to leave the funds untouched for a fixed period of time or face a withdrawal penalty.

5. Money market account

A money market account is a type of hybrid account that combines the features of a checking and savings account. They may be less flexible than checking accounts with limited debit cards and check-issuing privileges. However, money market accounts typically have higher interest rates than traditional savings accounts, along with some of the flexibility of access, like checking accounts. 

6. Business bank account

Businesses usually need a bank account to separate business transactions from personal. Banks offer both business savings and checking accounts that mirror personal accounts in features. For example, business checking accounts typically have unlimited withdrawal benefits and check writing. Businesses can manage customer payments and bill pay from business bank accounts.

7. Retirement account

Retirement accounts are investment accounts designed for retirement savings. A popular example is a traditional Individual Retirement Account (IRA), which also offers tax advantages. With an IRA, you contribute an annual, tax-deductible amount that you can choose to invest in financial instruments such as stocks and bonds; withdrawing before retirement results in a penalty fee (usually 10%). 

If you meet income requirements, a Roth IRA is a retirement account offering even more tax advantages. While you’ll pay taxes on the deposit upfront, the principal grows tax-free, and you can withdraw funds after age 59½ tax-free. 

How to determine how many bank accounts you should have

Do you need multiple bank accounts? The criteria below can help you select the best combination of accounts for your financial goals. 

1. Personal financial goals

Assess your financial goals and how you manage your money. Having multiple bank accounts can help you organize your finances and allocate funds for different purposes, such as saving for emergencies, paying bills, or saving for long-term goals like education or retirement.

However, for some people, multiple accounts can be challenging to keep track of. Consider at least one separate account for:

• Everyday income and expenses

• Short-term savings and an emergency fund

• Retirement savings

You might need multiple accounts for each of those goals or additional accounts for extra goals like savings for your children’s college tuition.  

2. Budgeting and expense management

Having separate bank accounts for different expense categories can be beneficial if you prefer to have a clear overview of your spending and keep your budget on track. Divisions will look different for each family but can make reaching short- and long-term goals easier.  

For example, you could have one account for fixed expenses like rent and bills, another for variable expenses like groceries and entertainment, and another for savings. Or, you could keep a single checking account but have three savings accounts for separate savings goals. 

3. Banking fees and benefits

Consider the fees and benefits associated with multiple accounts. Some banks may charge fees for maintaining various accounts, while others may offer benefits or rewards for having multiple accounts, such as higher interest rates or cash-back incentives. Check with your bank and online banks to select the most advantageous combination of accounts. 

4. Personal or business use

If you have a small business or freelance income, having a separate business account may be advantageous to keep your personal and business finances separate. This action can simplify bookkeeping and tax reporting to ensure better financial organization.

Generally, business and personal accounts are essential for tracking and managing expenses, even if you don’t have a formal business structure like an LLC. 

5. Convenience and accessibility

Evaluating how many bank accounts you can manage effectively is a personal consideration. Too many accounts can lead to confusion and make it difficult to track your finances. Consider your ability to easily manage transfers, monitor balances, and access account information.

You can also consider budgeting apps that integrate seamlessly with your bank accounts to simplify budgeting and tracking. 

👉 Can I Change My Bank Account Number?

Creating Financial Freedom

Opening more than one bank account for different goals makes sense for long-term financial planning. You can open multiple accounts at any bank, but many come with minimum balances. RoarMoney^SM Banking Account¹ offers access to 55,000 no-fee ATMs worldwide², cashback rewards³, and get paid up to 2 days early⁴! Get more bang for your buck with a RoarMoney account.

FAQs

Can I have more than two bank accounts?

Yes! You can have more than two bank accounts. The only limit on bank accounts is how many you can effectively manage to reach your financial goals. You could have three bank accounts or more. Having accounts at multiple banks gives you flexibility when getting a cashier’s check.

Should I have accounts at different banks or the same bank?

There are pros and cons to having bank accounts at one or multiple banks. Having accounts at different banks can maximize Federal Deposit Insurance Corporation (FDIC) insurance. In addition, you can mix and match the best perks or rewards at different banks. However, some banks offer better interest rates or other benefits for having multiple accounts at their bank. 

Should I close old bank accounts that I no longer use?

Consider closing an unused bank account, especially if it has monthly fees or minimum balance requirements.