Last Updated on 06/11/2017 by GS Staff
Q:How many savings accounts can I have?
People open multiple savings accounts for various reasons. Let’s take a look at some of those reasons:
Multiple savings accounts make it easier to track savings goals. For example, one account may be used to save for a car, a different account might be used to save for a house down payment, and a third account could be used as an emergency fund. A person might want to keep these three separate accounts to easily monitor each area of savings.
The problem with lumping all your savings into one account is that you do not get a clear picture on where you stand on your multiple financial goals. For example, let’s assume you have established three savings goals ($20,000 for college, $3,000 for vacation, and $10,000 for a future car purchase) and you have only one savings account with a $10,000 balance. It is difficult to establish how much is allocated to each of these three savings goals. Three separate savings accounts provides an easy way to track each of your goals without playing a guessing game.
The FDIC (Federal Deposit Insurance Corporation) insures an account in an FDIC-insured bank up to $250,000. If a bank fails, the United States government pays insurance on these accounts for the principal and accrued interest up t0 the $250,000 limit. Individuals with reserves in excess of $250,000 may want multiple accounts to protect themselves from loss if their bank fails.
Multiple Withdrawals Per Month
Savings accounts are limited to six convenient withdrawals per months. Things like third party online payments and automatic transactions count toward the limit. If you open several accounts, you will get six convenient withdrawals per account. Opening multiple savings accounts can help a person avoid getting penalized for exceeding the withdrawal limit.
Multiple Savings Downsides
Managing more than an account or two can become confusing. Here are some things to consider before opening multiple savings accounts.
- Multiple Logins: Many people use online banking to mange their money. When you open multiple accounts, you may have different logins and password for each account. This can be a hassle if you do not have a system in place to manage all of your login and password information.
- Account Requirements: Banks often have various requirements that must be maintained. For example, a bank may require a minimum account balance or a fee will be issued. If you have multiple bank accounts, you will have to monitor each account to ensure you are meeting the requirement to avoid fees or other penalties.
- Lower Interest: Savings accounts do not pay high interest but every little bit helps grow your money. When you have multiple accounts, one account may pay higher interest than the other account. If you are concerned with obtaining the highest return on your money, it may be wise to use one savings account with the best available interest rate.