banking

How many bank accounts should you have?

 

It might start with the checking account you opened when you moved out on your own, then perhaps you decided to open a savings account. Maybe your job let you open an account with the local credit union or you just couldn't pass up the free toaster for opening an account at the bank down the street. Once you get married, add the number of accounts your new spouse owns.

It's not uncommon for a family to have six or more accounts at different banks. Spreading your money across multiple accounts isn't necessarily a bad thing, but it comes with its own set of drawbacks. Here are some pros and cons.

A common reason you might open a new account is to chase a better interest rate. Online accounts pass on the savings of not having brick-and-mortar locations by offering higher interest rates, but in today's low-yield environment might not be worth the time and effort of paying close attention to rate fluctuations and moving your money around.

Claes Bell, senior banking analyst, Bankrate.com.

"You have to look at how much of a time commitment it's going to be for you, and then balance that against how much you will probably make. So you need to look at the interest rate that's available, look what you're getting now, and see if the difference is going to be enough to make up for the time you're going to spend because, you know, people have to remember their time has value, too."

Opening an account with a specific goal in mind, maybe to save for a new car or set aside money for a vacation, can be a great way to see progress toward your goals, but if you're carrying low balances across multiple accounts you'll see lower interest than if you'd put all of your money in a single high-yield savings account. Each account will have its own fees, too, so be wary of paying many small fees across multiple accounts.

One thing many couples argue over is financial habits. Here's a place where multiple accounts is a boon.

Having a couple of different accounts allows couple to have freedom and agency over their little bit amount of spending money, and you know they have money every month that they're allowed to use on whatever they want. And that can really help avoid conflicts and make people happier overall.

We'll file "independent finances" under "pros."

At the end of the day, there isn't a one-size-fits-all answer to how many bank accounts someone should have. It's all about your comfort level. What's important is taking an active role in your finances and making educated decisions. With that in mind, you can find more personal finance news and advice at Bankrate.com. I'm Lucas Wysocki.

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