Nearly 94% of American households have at least one primary bank account. But are they making the most of their finances? Holding a variety of different bank accounts is one way you can better manage your money.
You might be asking yourself, “how many bank accounts should I have?” It’s a question with no clear or definitive answer. But if you know some common saving and spending strategies, you can find out which is right for you.
Not sure how to make the most of your banking experience? Here are some banking strategies that might change how you store your money.
How Many Bank Accounts Should I Have?
Optimizing your financial holdings is the key to long-term financial health. For some people, the offerings of specific bank accounts are less important than the way they’re organized.
We’ll help you decide which bank account setup is right for you, starting with the most basic of account setups: Checking and savings accounts.
If you have a bank account with any financial institution, it’s probably a checking account. In this day and age, a checking account is virtually mandatory. Your checking account covers daily expenses, bills, and occasional outings.
A single checking account gets the job done. But what if you’re married? Some couples may decide to form a joint checking account.
For others, sharing their expenses removes too much of their autonomy. The solution for these married couples is to hold a joint checking account for their shared expenses but to also have personal checking accounts for their personal expenses.
In addition to at least one checking account, everyone can benefit from the addition of a savings account. A savings account allows a limited number of transactions but has significantly higher interest rates.
Rather than piling all your money in a single checking account, you’ll generate interest by stashing your savings in a savings account.
For those who have both short-term and long-term savings plans, it might be in their best interest to open multiple savings accounts. In general, your savings account should hold an emergency fund and your retirement reserves, if you’re not ready to invest them in the market.
But also, you might be saving for a vacation, a degree, or a downpayment for a house. Consider opening a savings account for each of these different purposes.
This is known as a bucket savings strategy. At most banks, you can even schedule automatic transfers. These can help you fill different accounts without any micromanagement on your end.
Multiple Bank Accounts
Don’t forget that you can hold multiple bank accounts at different banking institutions. This is especially important for savings. Before you open your first savings account, shop around for some of the best interest rates in the market.
Business Bank Accounts
You should have a checking account separate from your personal finances if you’re a freelancer or own a personal business. This is important not only for tax purposes but can help you keep track of your business’ income and expenses. Not to mention, many banks offer specific incentives for business accounts.
A business checking account might be enough if your income is small and it’s more of a side-gig. However, if you plan on seriously expanding your business, you might want to consider a business savings account as well.
If your business relies on a storefront, you’ll also want to open a merchant services account so you can accept debit and credit cards.
Does your business rely on international customers? Search now to measure risk and financial data that could impact your company.
When Should I Open New Bank Accounts?
In addition to strategically opening new bank accounts, you might want to consider transferring banking institutions under certain circumstances.
Keep in mind that every time you open an account, your credit will take a hit from a hard credit check. Don’t open too many accounts at once if you plan on taking out a loan anytime soon.
Sign Up Bonuses
Some banks offer serious payouts for opening an account with them. It’s not worthwhile to deal with the hassle of switching accounts for the usual bonus of $100. However, sometimes you can snag a deal and receive several hundred dollars.
When you come across a massive sign up bonus, it’s worth your time to open an account. You can easily make $1000 or more in a year just by looking for bank sign up bonuses. Of course, be sure that the financial institutions you choose still offer worthwhile features before you bank with them.
Additional Banking Features
Banking has come a long way. Many banks now offer mobile banking, ATMs without fees, and more. If you feel your bank is lacking in comparison, it may be time to open an account with someone else.
So long as you have an interest rate that matches the standard, it’s generally not worth the hassle of opening a savings account at a specific bank unless it’s a massive increase. To stay competitive, most banks have nearly identical rates.
How Many Bank Accounts in Total?
“How many bank accounts should I have?” The truth is there’s no easy answer. At the very least, you should have two: a savings account and a checking account. However, if you own a business or are married, that number is likely to increase.
You might also own more savings accounts for organizational purposes, or to get the most of sign-up bonuses and banking features.
Want more personal finance advice? Check out our personal finance articles.