Reasons to have Multiple Savings Bank Accounts (2024)

FAQs

Is it a good idea to have multiple savings accounts? ›

Bottom line. Having multiple savings accounts could help you keep your money covered by FDIC insurance, keep your emergency fund safe from spending, and help you better track your goals.

Having multiple bank accounts may help track individual savings goals more easily. Separating finances. For spouses and domestic partners who prefer to split household finances, multiple bank accounts can help you spend and save in a way that's right for your relationship. Raising money-wise kids.

The FDIC insures up to $250,000 per account holder, insured bank and ownership category in the event of bank failure. If you have more than $250,000 in the bank, or you're approaching that amount, you may want to structure your accounts to make sure your funds are covered.

For savings, aim to keep three to six months' worth of expenses in a high-yield savings account, but note that any amount can be beneficial in a financial emergency. For checking, an ideal amount is generally one to two months' worth of living expenses plus a 30% buffer.

So, regardless of any other factors, you generally shouldn't keep more than $250,000 in any insured deposit account. After all, if you have money in the account that's over this limit, it's typically uninsured. Take advantage of what a high-yield savings account can offer you now.

"There is no right or wrong number of savings accounts," says Kendall Meade, a certified financial planner at personal finance platform SoFi. "Some people prefer to separate their savings into multiple accounts for different purposes, while others find it simpler to have all of their money in one account."

No, having multiple savings accounts doesn't directly affect your credit score.

While having multiple accounts can have its perks, it can also lead to confusion and complicate your financial life. If you find it hard to keep track of all the accounts and their balances, it's best to stick to one or two accounts.

The standard maximum deposit insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. The FDIC insures deposits that a person holds in one insured bank separately from any deposits that the person owns in another separately chartered insured bank.

Millionaires can insure their money by depositing funds in FDIC-insured accounts, NCUA-insured accounts, through IntraFi Network Deposits, or through cash management accounts. They may also allocate some of their cash to low-risk investments, such as Treasury securities or government bonds.

Is it wise to keep all your money in one bank? ›

Keeping all of your money in one bank can be convenient. But it's important to consider whether you're getting the best rates on savings and paying the lowest fees for checking accounts. It's possible that you could get a better deal by keeping some of your money at a different bank.

The seven percent savings rule provides a simple yet powerful guideline—save seven percent of your gross income before any taxes or other deductions come out of your paycheck. Saving at this level can help you make continuous progress towards your financial goals through the inevitable ups and downs of life.

The 4% rule limits annual withdrawals from your retirement accounts to 4% of the total balance in your first year of retirement. That means if you retire with $1 million saved, you'd take out $40,000. According to the rule, this amount is safe enough that you won't risk running out of money during a 30-year retirement.

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

Having multiple bank accounts can help separate finances when needed. Couples might want a joint bank account for funds managed together and separate accounts for personal funds. If you're a small business owner, having a different account for your business finances makes it easier for bookkeeping and tax purposes.

According to financial experts, it isn't advisable to open more than three Savings Accounts, as it can be difficult to manage.

Opening a savings account does not impact your credit score because you aren't borrowing money and the activity in your savings account isn't reported to a credit agency. Most financial institutions will run a soft credit inquiry when you open a savings account but it is only to check your identity.