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How Many Savings Accounts Should I Have?

The best way to ensure that you build wealth and avoid debt is to diligently plan and save as much money as possible for both future needs and desires. However, exactly how you handle your savings can depend greatly upon your financial habits.

Some financial experts recommend setting up a simple savings account tied to your checking account, while others advocate opening multiple savings accounts to be used for various savings targets.

There are pros and cons to each approach. Of course, a major part of your final decision depends on your financial personality.

7 Reasons You Should Have Multiple Savings Accounts

The ease of opening online bank accounts allows you to open multiple savings accounts within minutes, either with the same financial institution or spread out among several.

Doing so might make sense for you for the following reasons:

  • You Have Multiple Savings Goals. The main reason to open more than one account is to track exactly how much you have saved toward each individual savings goal. For example, if you want to save three months’ worth of income in an emergency account, set money aside for a down payment on a house, and fund your summer vacation, then you could open three accounts to see at a glance how close you are to reaching your goals.
  • You Need to Separate Your Savings. You need to keep some of your money on lock-down so it’s available if you face an emergency. Consider keeping an emergency fund in an account that’s easily accessible, and then store the remainder of your funds in accounts tied to various short- and long-term targets.
  • You Have High Balance Accounts. FDIC insurance covers each depositor up to $250,000. You may need to spread your money around to avoid the risk of exceeding the insurance limit.
  • You Are Concerned One of Your Banks Could Fail. While FDIC insurance reimburses you if your bank goes under, it could take time before you have access to your money. Keeping some money in another financial institution means that you are more likely to always have funds when you need them.
  • You Can Receive Multiple Perks. While you may want a bank with an ATM near your home or workplace, online banks often offer better interest rates, and some institutions give you a bonus for opening an account. You may be able to take advantage of perks from several institutions if you open multiple accounts.
  • You’re Indecisive. You can try out different banks and credit unions for a while to gauge their levels of service.
  • You Need to Make Withdrawals Regularly. Money market accounts and savings accounts are typically limited to six withdrawals per month. However, if you open three such accounts, you can withdraw money up to 18 times per month. Just be sure that the money you withdraw is being used for further investments or for applying to your specific savings goals – otherwise, you’re just depleting your accounts.

7 Reasons You Should Not Have Multiple Savings Accounts

Despite the various advantages, there are several reasons you may want to keep your savings in one place rather than in multiple accounts:

  • It Can Be Hard to Reach Minimum Balance Requirements. Many savings accounts require you to open an account with $2,000 or more or require you to maintain a minimum balance in order to earn interest.
  • Building Banking Relationships Can Be More Difficult. Even if you choose to have multiple bank accounts, it may pay to keep them with one financial institution, as some banks provide lower interest rates on loans or reduce fees for customers with multiple accounts.
  • You Could Lose Interest. While the interest paid on most savings accounts is pretty low, some accounts pay a higher interest rate on a larger balance. Spreading your funds into many accounts may keep you from earning the highest rate.
  • You May Find It Confusing. If you have $500 allotted to save each month or you receive an unexpected bonus or gift, you’ll have to decide whether to put it all toward one goal or to split it between various accounts. If you have only one account, you won’t have to decide immediately how to appropriate the money.
  • Multiple Accounts Can Complicate Automatic Transfers. If you choose to have money transferred from each paycheck, it may be too much to keep track of if you are having cash transferred to a variety of accounts.
  • You May Lose Some Money. If you are less-than-perfect at keeping track of your finances, you may be better off with one account – or at least with keeping all your accounts with one financial institution so you don’t forget what you have and where it is.
  • You Could Pay Higher Fees. Some financial institutions charge fees for their accounts, especially on accounts with a low balance. Make sure you’re not overpaying by dividing your savings.

Questions About Your Savings Habits

1. Do You Have a Budget That Includes Room for Saving?

If not, you need to create one, even if you can only save a tiny amount from each paycheck. Use financial software like Personal Capital or just a pencil and paper to list all your income, all your fixed expenses (such as your rent or mortgage and car payment), and your fluctuating expenses (such as groceries and discretionary spending). You may need to track your spending for a few weeks to find places to cut spending so you can build your savings.

2. Are You Comfortable With an Automatic Transfer of Funds Into a Savings Account?

Automatic savings are the easiest way to ensure consistent savings deposits. If you are comfortable with it, have a set amount transferred to your savings from each paycheck. Over time, you can significantly increase your savings.

If your bank doesn’t offer automatic savings, look into a Chime bank account. Each time you make a purchase, Chime will round up and add the difference to your savings account. Plus, each time you get paid, you can have 10% of your paycheck automatically deposited into your savings account.

3. Do You Frequently Tap Into Your Savings for Non-Emergency Spending?

If you regularly spend money from your savings account, you may need to open an account that is more difficult to access, such as a certificate of deposit (CD) or a money market account that limits you to six withdrawals per month. If you choose a CD, be aware that most charge a penalty for early withdrawal. If you’re dipping into your savings often, this may be a sign that you need to reorganize your budget.

Final Word

If you are supremely organized and want to keep your funds for various needs and desires separate from each other, you may be a good candidate to open multiple savings accounts.

However, be sure you aren’t missing out on the perks of having a high balance with one financial institution or having fees eliminated because you have multiple accounts with one bank or credit union. You should compare interest rates and fees on all accounts before you make your final decision.

Do you prefer having one savings account, or do you keep your money in several places?

Michele Lerner, author of "HOMEBUYING: Tough Times, First Time, Any Time," has been writing about personal finance and real estate for more than two decades for a variety of publications and websites including Bankrate, Investopedia,, National Real Estate Investor, The Washington Times, Urban Land, NAREIT's REIT, and numerous Realtor associations.