If you’re trying to get your finances in check, it would seem like simplicity should be your friend. In other words, you might think one bank account is ideal.
However, you might be surprised to learn why it can be better to have more than a single account. The reality is that several bank accounts might not be the best solution for everyone, but depending on your situation, there could be some distinct benefits to opening multiple accounts.
The greatest benefit of holding a single account is simplicity. You won’t have to travel to multiple banks or use different ATM machines, but the simplicity comes at a cost.
Borrowing from Yourself
An excellent reason to open multiple bank accounts is the ability that it gives you to borrow from yourself. When you have multiple bank accounts, all of your money is spread out across the accounts.
In other words, all of the accounts that hold your money aren’t linked, so it can be a hassle to transfer money from one account to another. You can benefit from this because it makes you less likely to spend money that you shouldn’t be spending.
Another issue with keeping all of your money in a single account is that it plays with your mind and makes you believe that you can spend all of the money in the account.
If you decide to open multiple accounts, you get the benefit of seeing what other banks have to offer, and you might find that you really enjoy the way a particular bank operates and organizes your account information.
Get Better Rates
If you don’t check around, you’ll never know what other banks have to offer. After doing some research, you might find that some banks offer significantly better rates than others, and you might decide to move the majority of your money to the new bank.
A lot of people like to keep an emergency fund inside of a savings account. If this describes you, then it’s important to make sure you’re making as much off of your savings as possible.
Most physical banks offer great checking accounts, but they don’t offer the best rates for savings accounts. To get the best return on your emergency fund, you might want to consider opening a savings account with an online bank. There is a good chance that you can get a much better interest rate with an online bank.
Spreading Your Money Around
Another important reason to have multiple banking accounts is the fact that it allows you to spread your money around. If you’re someone who has a lot of cash, then you need to find out how much your bank will allow you to insure.
FDIC insurance helps to protect your money, but depending on how much cash you have, a single account might not be enough to protect all of your cash. In most cases, a single account is good for insuring up to $250,000, so if you have more than this amount in cash, you should open multiple accounts and spread your money around, which gives you better FDIC protection.
These are three important reasons to have multiple banking accounts, but many consumers will prefer the simplicity of holding a single account.