For one who has different financial goals, having multiple bank accounts may cross their minds. He can put up a savings account for short-term goals such as putting up home security or long-term ones like buying a brand-new car in two years. Having separate bank accounts is like organizing your money according to their purposes.
Meanwhile, some believe that having just one bank account is more convenient and secured.
Be it a checking account, savings account, or both, every decision involving finances should be made carefully. Opening up multiple bank accounts and maintaining them have certain measures that one must take into consideration to avoid a possible hassle in the future.
Here are the things you need to know to let you decide:
What are the advantages of maintaining a single bank account?
Most people find it convenient and secured to have their bank accounts at a single bank only and not in multiple banks.
Keeping your accounts—be it checking or savings—in one bank makes banking, accounting, and money management easier. When a problem arises, it would be easier to direct your attention to a single bank than to scramble and track your financial activities from various banks. Account owners need to worry about multiple checkbooks, multiple account numbers, routing numbers, and contacting multiple customer services. By keeping your money in one account, there is a reduced risk of overdrafts, usually obtained by having multiple accounts and banks. Your credit score may likely be affected, too, if you have unsettled overdrafts.
Easier to maintain the minimum balance
In terms of maintaining your account, one may find it more challenging to keep up with the minimum balances required in each account, which may be challenging when your money is spread in different banks.
Safer and more secured
Moreover, there is a lower risk of losing your security and safety of your information when you only maintain a few banks and accounts. Fraud and identity theft are minimized because only a few institutions know and have access to your personal data.
Why should you consider a second bank?
Some opt to open another bank account in other banks to separate their money for a different purpose. Say you need to save some investment money, retirement or emergency, your bank accounts for these long-term financial goals should not be accessed easily or within reach to avoid abrupt withdrawals. Some prefer putting up a new account to other banks so it will be separated from their everyday ATM card or even their credit cards. What do you think works best for you?
Lastly, you can choose to have a second bank if you want to chase interest rates. Banks are offering higher interest rates on savings and Certificate of Deposits (CDs) than the one percent they are currently offering. Having a second account to move around quickly to chase the highest interest rate while keeping money at your primary bank.
What should I do with my current existing multiple accounts?
Now, what if you currently have multiple accounts in different banks? Unless you have reasons stated above, it is recommended to close other accounts that are not used frequently. But do not just immediately close them down yet. Check first if these rarely-used accounts have any deposits for withdrawal.
Remember to choose the right bank for you and your money. Consider their low fees, excellent customer services, and online banking features that will make your banking experience easier and more convenient.
Based on Materials from The Simple Dollar