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How Many Bank Accounts Should I & Can I Have?

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Everybody needs a bank account — but is one enough? Most banks will let you have more than one account, so you might be wondering, “How many bank accounts should I have?

Generally speaking, you should have at least one checking account and one savings account, but there’s no hard and fast rule to this number; some people believe you should have a handful of bank accounts to be financially prepared for the future.

There are several types of bank accounts that you can have with various financial institutions (banks and credit unions), but it might not always be in your best interest to open one. Ultimately, only you can decide how many bank accounts you should have based on your specific circumstances — but we’ll go over each option to help you make an informed decision.

Is it a good idea to have multiple bank accounts?

Yes, it’s smart to have more than one bank account in your name. GOBankingRates conducted a survey and found that 50% of Americans have accounts with two or more banks.

What are the benefits of having more than one bank account?

If you currently have one checking account, you should consider opening a separate savings account for a few reasons.

  • Organize spending and simplify budgeting. If you follow the 50/30/20 rule, you can easily allocate 50% of your income to “needs” and 30% to “wants”.  The extra 20% goes right into savings. By having the money set aside for your essential costs of living, you’ll never be caught off guard when you’re hit with an automatic mortgage payment, for example, that you weren’t prepared for. 
  • Protect your emergency fund. As the name implies, you should only break into this account in emergency situations. The money is meant to provide a cushion that can help you get through financial downturns, and having it set aside ensures it will always be there should you ever need it. 
  • Separate personal and business expenses. If you own a small business or work as a freelancer, you can get tax relief by claiming qualified business expenses on your income tax return. But keeping track of these purchases — in addition to managing positive cash flow — can be really hard to do within one checking account. 
  • Access better terms or different services. Some banks offer accounts with promotions such as low fees, better interest rates, and rewards for purchases. You can also find bank accounts that offer certain features, like mobile check deposit, catered to your lifestyle’s needs. 
  • Receive greater protection. The FDIC will insure up to $250,000 per depositor, per insured bank, for each type of account ownership. If you have over $250,000 in one bank account, you could move the remaining funds over to another FDIC-insured bank for full protection.

What types of bank accounts can I have?

Before you can decide how many bank accounts you should have, you’ll first need to know what your options are.

We glossed over a couple of them in the section above, but the six main types of bank accounts, according to eCheck.org, include: checking accounts, money market accounts, savings accounts, Certificates of Deposit (CDs), investment retirement accounts (IRAs), and brokerage accounts.

Checking account

Designed for everyday use, your personal checking account allows you to access money through your local branch, an ATM, or a mobile app. You can write checks for the funds in the account, and many people link it to a debit and/or credit card for cash-free transactions.

There are several types of checking accounts you can open:

  • Basic account – Offers a small set of fundamental features suitable for day-to-day banking
  • Joint account – Allows spouses to share dual ownership of one bank account
  • Free account – Carries no monthly “maintenance” fee nor minimum account balance
  • Online-only account – Also known as express banking, these low-touch accounts typically charge less
  • Rewards account – Earns cash-back or reward points for specific purchases
  • Special account – Caters low rates to people who typically do not write many checks per month, such as students and senior citizens

Some of the top checking accounts offer valuable promotions for signing up; be sure to shop around before opening an account with the first bank you find.

Money market account

A money market account acts as a hybrid between a checking and savings account. ConsumerFinance.gov notes that they’re also insured by the FDIC (unless they’re offered through a credit union, then they’re insured by the National Credit Union Administration), but federal laws provide restrictions on how they can be used.

There are several ways they differ from traditional bank accounts, such as:

  • They offer higher interest rates, but the banking features are more limited.
  • Withdrawals and payments are capped at six per calendar month when made by ATM, check, debit card, draft, or electronic transfer.
  • A high minimum balance may be required to maintain the account without incurring fees.

You might want to use one of these bank accounts as a safe place to grow your money through earned interest. Liquidity restraints will make you less likely to spend the funds, but you still retain access to cash if necessary.

Savings account

A savings account is used to save up for a specific goal, like buying a car going on vacation, or to set aside money for unexpected costs. Here’s an overview of some of the most popular variations that you might use to organize your finances.

  • Traditional account – Offers 1-2% interest, which rate can go up or down over time depending on the rates set by the Federal Reserve
  • High-yield account – Provides a high annual percentage yield (APY), or the amount of interest that compounds over a yearly basis 
  • Emergency fund – Designed only to break into in case of emergencies, such as losing your job or affording unplanned medical bills

FINRA.org says that most experts recommend having at least three to six months of living expenses saved to help you get past a difficult time, but that can be hard to measure if you only use one bank account to pay your bills, make purchases, and hold savings. That’s why it’s best to have at least two bank accounts: one for checking and one for saving.

Certificate of Deposit (CD)

A CD is another savings vehicle in which you agree to lend money to a financial institution for a fixed amount of time on interest. Here are several additional characteristics that set them apart from other bank accounts:

  • A CD offers higher interest rates than most standard savings accounts.
  • A large minimum deposit is usually required to open the account.
  • They’re issued by banks for a specific “term”, or duration of time, often ranging between six and 60 months.
  • CDs are usually geared toward long-term savings goals, like college tuition or a down payment on a house.
  • When the CD reaches its maturation date, you can choose to walk away with the money or roll it over into a new CD.

The interest rate on a CD stays the same for the duration of the term, meaning you can plan ahead knowing how much your money will grow over time. Many people use CD laddering — or the opening of multiple longer-term CDs at various terms — as a disbursement strategy that provides access to money at different times and different rates. This helps maximize savings by preventing being locked into one interest rate or maturation date.

Investment retirement account (IRA)

Unless you’re enrolled in your employer’s 401(k) plan, it’s prudent to create and contribute to an IRA in order to start preparing for retirement. There are two different types:

  • A traditional IRA that allows you to grow pre-taxed dollars and defer taxes upon disbursement
  • A Roth IRA in which you make contributions that are taxed at your current income rate, then later disbursed as tax-free funds upon retirement

In either case, the asset allocation is overseen by the IRA account manager based on your goals and risk assessment, providing you with a passive, hands-off way to invest for the future.

Brokerage account

A brokerage account can either be managed professionally or run independently through online platforms like Robinhood. This gives you the ability to actively buy, sell, and trade stocks, mutual funds, and ETFs with the goal of generating capital gains faster than your long-term positions held for retirement.

Keep in mind, however, with higher reward comes higher risk. You should always be aware of the full risk involved with every financial decision you make.

How many bank accounts can I have?

We’ve gone over six types of bank accounts you can have depending on the type of user you are. Most banks do not have a limit on the number of accounts you can have, but there are some guidelines that suggest when you should and shouldn’t open a bank account.

When to open a bank account

You might open another bank account if:

  • You need FDIC deposit insurance for funds exceeding $250,000 held at another insured bank.
  • You get married, start a business, or change your spending habits.
  • You’re trying to save up and set aside money for a specific goal.
  • You’d like to access certain features, such as online bill pay or the ability to transfer money between banks, that your current financial institution doesn’t offer.

Note: If you’re unsure about the difference between a bank and a credit union, you should read up to learn more about the features that set these entities apart to find the right solution to your needs. Some may provide services more aligned with your preferences, such as access to mobile banking — a new feature that’s surged in demand, according to the recent FDIC report.

When not to open a bank account

Alternatively, you might reconsider opening another bank account if:

  • You already have $250,000 held at one financial institution.
  • You anticipate a change in location, marital status, or employment.
  • You have concerning marks in your consumer report, such as a checking account involuntarily closed due to unpaid fees.

Note: To avoid this situation, it’s important to learn how to close a bank account; doing so improperly by zeroing out an account and leaving it open can result in unknown costs adding up, thereby hurting your financial wellbeing.

You can learn more about opening and managing checking accounts from the guides published at ConsumerFinance.gov.

How many bank accounts should I have?

Keep in mind that although you can have handfuls of bank accounts, doing so could make your finances unnecessarily complex and disorganized. If you’re still not sure how many bank accounts you should have, a basic rule of thumb is:

    • One or two checking accounts – You might share a joint checking account with your spouse and maintain a separate account for individual, day-to-day spending. You could also direct deposit 50% of your paycheck into one account for automatic bill pay, and allocate 20% to discretionary spending with a separate debit card. 
    • Two or three savings accounts – Set money aside in a rainy day fund until you have enough saved to cover the cost of living for several months in case of emergency. Then, allocate your savings to the financial goals you’re aspiring toward in the near and far future. 
  • One retirement account – It’s never too early to start saving for retirement, and the sooner you start making contributions to your portfolio, the greater the value of compounding interest will be in the long run.

Once you have these bases covered, you can look into adding more bank accounts depending on your spending and saving needs.

How to manage multiple bank accounts

As you spread out your money, remember to follow these essential tips that can help organize accounts held at different banks:

  • Open and review all the statements from your bank or credit union.
  • Use ATMs affiliated with the financial institution when withdrawing money from the account to avoid charges.
  • Pay attention to monthly service fees.
  • Avoid overdraft fees by monitoring spending and account balances.

Mint is a great way to manage your bank accounts with less work required. Simply link your accounts to the secure Mint app and receive an easy-to-read breakdown of your account balances and spending habits to see exactly where your money is coming and going.

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