It’s common to have a checking and a savings account, but there are plenty of reasons to have additional accounts to better manage your expenses and work toward your financial goals. Maybe you’re splitting expenses with a significant other, so you open a new checking account to share. Or you might be trying to earn more on your money with a high-yield savings account.
While the answer to “how many bank accounts should you have?” is different for everyone, it often makes sense to have more than one. Let’s look at some reasons to have multiple bank accounts.
Reasons to have more than one checking account
Checking accounts are designed for everyday expenses. They allow you to easily deposit money and pay bills. Checking accounts come with a debit card you can use to make purchases and withdraw money at ATMs. You don’t typically earn interest on money in a checking account, but they provide flexibility for handling everyday expenses.
Having more than one checking account could make managing your finances easier. Here are some reasons you might consider this:
- Sharing expenses: If you and your partner share some financial responsibilities, such as rent, utilities or groceries, having a joint checking account can simplify the process. You can both control how much you contribute to the account, and having a separate account for shared expenses can make it easier to track joint spending.
- Sticking to a budget: When you split your funds into multiple accounts, it can prevent you from overspending. For example, once your "discretionary spending " account is low, you’ll know it’s time to cut back until your next payday.
- Keeping business expenses separate: Maintaining a separate checking account for your business or side hustle makes it easier to track income and expenses. A separate account can be especially helpful at tax time.
Reasons to have more than one savings account
Savings accounts are designed to help you store and grow your money over time. You can earn interest on your deposit. While money in a savings account is generally easily accessible, there may be limits on the number of withdrawals you can make each month.
A savings account can be a great place to build your emergency fund or save for a financial goal. Here are some good reasons to consider opening multiple savings accounts.
- Build an emergency fund: A savings account can be a great way to keep your emergency fund easily accessible.
- Specific savings goals: If you’re saving for a few different things – like a vacation or a new car – having individual savings accounts for each goal may help you track progress more effectively.
- Automate savings: Many banks allow you to automate savings by setting up automatic transfers from your checking to your savings account. You can also split your direct deposit between checking and savings.
Other types of bank accounts to consider
Checking and savings accounts aren’t the only places to keep your money. Here are some bank account types that can help you earn interest on your deposits.
Money market accounts (MMAs)
MMAs offer a blend of checking and savings account features. They usually have higher interest rates than regular savings accounts. MMAs may come with debit cards, and you may be able to write checks. However, they can come with some restrictions, such as minimum balance requirements or transaction limits.
High-yield savings accounts (HYSAs)
HYSAs can offer higher interest rates than traditional savings accounts, letting your savings grow faster. However, they may have minimum balance requirements and limits on the number of withdrawals and transfers you can make per month.
Certificates of deposit (CDs)
CDs are time-deposit accounts that typically offer higher interest rates than traditional savings accounts. CDs require you to lock your money away for a set period – usually a few months to several years. A CD may be a good option if you don’t need immediate access to your funds and want to earn a return. Just be aware that withdrawing money early can result in penalties.
This article is for general educational purposes. It is not intended to provide financial advice. It also is not intended to describe any Citi product or service. You should refer to the terms and conditions financial institutions provide for various products.