How Many Bank Accounts Should I Have?

If you need to organize your spending costs and retirement savings goals, consider opening multiple bank accounts. Keep in mind that multiple bank accounts aren’t a good idea for everybody.

For example, say you’re considering four bank accounts and each one has a required minimum deposit. If you can’t keep the required minimum deposit in each account, you could face fees. This is usually an indication that multiple bank accounts currently won’t fit your needs.

“Ask yourself: Why would you want multiple bank accounts? Some people like bank accounts for savings goals, such as one account for a vacation and another to renovate their home or to make a large payment of their debt,” Susan Greenhalgh accredited financial counselor and president of Mind Your Money, LLC told RetireGuide.

“Many online and brick and mortar banks accommodate people and allow them to open multiple accounts for these reasons. I like the idea of having a set name for an account based on the goal you have for it.”

There are certain situations that may specifically benefit from the account holder having multiple bank accounts.

Multiple bank accounts can offer you flexibility, potentially higher interest rates, better organization, fraud protection and higher FDIC coverage.

“If you’re going to have multiple bank accounts, they can be difficult to keep track of. You’ll have more statements to review and keep track of,” Greenhalgh told RetireGuide.

Struggling to manage your accounts isn’t the only potential drawback. Owning multiple bank accounts can mean higher fees and maintenance requirements. To minimize the risks associated with opening multiple bank accounts, do your research to see which banks have low fees and minimum account balances.

For example, Ally Bank and Discover don’t require a minimum account balance and have no monthly service fees.

While some experts have recommended the High-Five Banking method, which is two checking accounts and three savings accounts, you could reap similar benefits with only four bank accounts.

Consider this the Secure Four method, which covers your recurring bills, fun expenses, an emergency fund and savings goals.

Remember that there isn’t a set perfect number for how many bank accounts you should own. That number could be one, four or five — depending on your own unique needs and goals.

“If it makes you feel better to have five bank accounts that you’re tracking with their goals, and because of that you’re being more mindful of your money, then go for it,” Greenhalgh told RetireGuide.

“But if you’re the type of person who may forget about additional bank accounts, or move and forget to alert the bank, then you might lose track of your money.”

Determine how many bank accounts you actually need to best manage your bank accounts. For example, if you’re strapped for cash, you could consider taking baby steps towards maximizing your bank accounts.

Instead of opening multiple bank accounts all at once, you can open them one at a time.

If you only have one checking account, you could open a savings account to start building your emergency funds. Down the line, when you have your finances in order, you can consider opening a secondary checking account reserved for fun spending, and a secondary savings account designated for long-term and short-term goals.

If you’re considering other types of accounts to earn additional interest, you could open a high-yield savings account, money market account or CD.

Editor Malori Malone contributed to this article.