Should you have one or multiple bank accounts? Here are some tips to help you decide how many bank accounts you should have.
Most people have multiple bank accounts. Often, these are created in the process of moving from one job to another. Each employer may have their salary accounts held with a preferred bank. You may also open additional accounts for family, investments, business, and so on. The reasons for owning multiple accounts are many. But the question is this: What is an ideal number of savings or bank accounts you should have?
Adhil Shetty, CEO, Bankbazaar.com, opines, “Owing to multiple needs, people require different financial products from banks such as credit cards, loans, fixed deposits, lockers, etc. The type of facilities offered to customers may also vary from bank to bank. So, multiple bank accounts allow you flexibility and access to multiple banking services. However, it doesn’t mean you need to open an account with all the banks. Having too many bank accounts can cause you more trouble than benefits.”
Here are some tips to help you decide how many bank accounts you should have.
Minimum Monthly Balance
Almost all savings accounts require you to maintain a minimum bank balance. If you fail to maintain the minimum balance, the banks may levy non-maintenance charges on the account holder. If you hold one or two bank accounts, you can easily track and fulfil the minimum balance requirements. However, if you have many bank accounts, you may find it difficult to maintain the balance in each account.
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The minimum balance may vary from bank to bank and depends on your category of savings account. A basic savings account or salary account may come with a zero-balance requirement. But, you won’t get any facility with it. Therefore, you need to assess how much money you can manage to maintain a minimum balance before you decide to keep one or more than one bank account.
Facilities Being Offered To You
Before opening a bank account, list the facilities you may require from your account. For example, you may need a premium debit/credit card, locker facility, zero charges on cash deposits, and a higher cash withdrawal facility from the ATM.
Depending on the types of facilities you may require, find the bank accounts which can offer you most of the required facilities at the lowest charges and with a low minimum balance requirement. You may opt-out of those financial institutions levying high annual maintenance fees for facilities you will never need. It will help you open bank accounts in sync with your financial requirements, avoiding unnecessary charges.
Manage Your Financial Planning
People usually have many financial goals in life. However, they may come across difficulties saving money for each of their goals. Having separate savings account for each goal can make it difficult for you to track multiple bank accounts. So, you can segregate the short and long-term goals and maintain separate bank accounts for saving money toward such goals. It will ensure that you don’t disturb the fund held in your bank account for your financial goals or other purposes.
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Planning To Take A Big Loan
We all take at least one big loan in our lifetime. Be it a home or a business loan; you may look for a bank that can give you the best offer in terms of interest rates and charges. So, having more than one bank account can allow you to choose a better lender and save money by getting a loan at a lower interest rate and additional charges. Suppose you have a plan to take a big loan in the future. In that case, it’s better to do research well in advance and open an account in the bank, which is expected to offer the best deal when you apply for the loan. Usually, the bank offers a better deal to their existing customers who have a good transaction record in comparison to a non-account holder.
Cost-to-benefit analysis of holding multiple bank accounts
Before you open multiple bank accounts, you must do a cost-to-benefit analysis. Check out how much funds you would be required to maintain in each bank account and what would be the total annual charges. The fund you maintain in each bank account will only give you a low interest. Therefore, make a list of benefits and compare the same with the cost you would bear to maintain one or more than one savings accounts. If the benefits are more than the cost, you may continue to hold all the bank accounts; otherwise, work out a plan to close such accounts which are the least beneficial for you compared to their cost.
It is prudent for people to maintain up to 2 or a maximum of 3 bank accounts. You can easily maintain and track them. There are lesser chances of the account getting dormant. You can easily check activities. Instead of several low-category accounts, having a fewer high-category savings accounts can offer you greater benefits.
