There’s no right answer about how many savings accounts you should have. The optimal number of savings accounts for you might differ from the optimal number for someone else. That’s because everyone’s financial situations are different.
If you’re considering opening a new account, here’s what to know about having multiple savings accounts, the potential benefits and drawbacks, and how to identify the best savings account for your money.
How many savings accounts should you have?
The total number of savings accounts you should have depends on your unique needs. For example, if you’re setting aside money for a home down payment or a new truck, separating that cash from your everyday savings or emergency fund could be a smart strategy. That way, you can clearly see how you’re progressing toward each savings goal.
While having several savings accounts for different financial goals can be helpful for some, this approach can also feel unwieldy to others. Managing multiple accounts can be more time-consuming than having just one. You’ll need to funnel cash to each, monitor your savings progress, and keep track of multiple account numbers and login credentials.
Benefits to having multiple savings accounts
Clear savings goals: Having multiple savings accounts — rather than one account where your money is lumped together — allows you to easily track how much you’ve saved for specific goals.
NCUA or FDIC insurance: Savings account balances of up to $250,000 per account are insured by the National Credit Union Administration (NCUA) or Federal Deposit Insurance Corporation (FDIC). If you’re a super saver and your balance exceeds $250,000 by a certain amount, you could move that amount to a new savings account to ensure all your money is NCUA- or FDIC-insured.
High-interest options: Some high-yield savings accounts offer APYs of 4.00% or more. Opening multiple accounts could give you access to more interest-earning opportunities.
Savings account bonuses: Many banks offer new account bonuses to maintain a set balance for a specific period or to meet other criteria. Since these bonuses are often worth hundreds of dollars, they can be a lucrative way to pad your savings.
Things to watch out for with multiple savings accounts
Fees: Certain banks may charge fees for not maintaining a minimum balance or making more than six monthly withdrawals. These could add up if you have your money stashed across several accounts.
Tracking issues: We’ve all had the frustrating experience of forgetting our username and password for an online account. If you have multiple savings accounts, you’ll need to remember multiple login credentials and account numbers, which could be difficult.
Lost interest: If your money is spread across multiple accounts with varying APYs, you might earn less interest than you would with it lumped together in one high-yield savings account.
What are the best savings accounts?
There are different types of savings accounts, and the best one for you will depend on your situation and goals. In general, the best savings accounts offer high rates and minimal fees, so keep that in mind if you’re shopping for a new account.
High-yield savings accounts
Putting money into a high-yield savings account can be a smart move if you’re seeking the highest possible APY. These accounts frequently offer APYs of 4.00% or higher, which means you earn more interest on your money than you would with a traditional savings account. Per the FDIC, the average APY on a traditional savings account is just 0.39%.
Best for: Earning the highest possible interest.
Traditional savings accounts
Traditional savings accounts may not have the highest possible APY, but they’re still a good option for many people. This is especially true if you prefer to do your banking at a brick-and-mortar location or if you frequently make cash deposits. Having access to a local bank or credit union makes sense in these situations.
Best for: Banking in person.
Money market accounts
While they might offer APYs comparable to high-yield savings accounts, money market accounts (MMAs) offer a bit more flexibility. You’ll typically get a debit card and a checkbook with an MMA, which you won’t get with a high-yield or traditional savings account. In addition, MMAs may have higher minimum balance requirements than other savings accounts, making them a better option if you have significant savings.
Best for: Spending flexibility.
Certificates of deposit
If you need to set aside money for a medium-term goal, like buying a car in the next five years, a certificate of deposit (CD) may also be worth considering. These accounts come with set terms, anywhere from several months to several years, and account holders must keep their money deposited for that timeframe or pay early withdrawal penalties. Because your money can be tied up for a while with a CD, banks typically offer higher-than-average rates on these accounts.
Best for: Earning high interest for medium-term goals.
What to look for in savings accounts
Rates: Comparing APYs as you research savings accounts can help you find the highest rate possible. High rates translate to more interest earnings — and more money in your pocket.
Fees: Account fees are another consideration. Monthly maintenance fees are common, but excess transaction fees and other fees may apply. If the fees negate potential interest earnings, it’s likely worth considering another account.
Ease of access to money: Different savings accounts provide different levels of access to your money. For instance, an MMA may be your best option if you want flexible access. But a CD could work if you’re saving for a longer-term goal.
Minimum balance requirements: Some credit unions and banks require new account holders to make a minimum initial deposit. Others may charge you a fee for not maintaining a minimum balance. Compare minimum balance requirements as you research account options.
Where to open savings accounts
When it comes to opening savings accounts, you have a few options. You could open a new account with your existing bank or at another local bank or credit union. Or, if you’re comfortable with digital banking, you could open a savings account with an online bank. Online banks tend to offer higher rates, as they aren’t paying overhead costs to maintain physical branches.
Ultimately, the best place to open a new account will depend on your unique needs and situation.
How much should I save?
Experts often recommend setting aside six months to one year of savings. That way, if you’re hit with an unexpected, significant financial setback, you can cover your living expenses and day-to-day costs. However, you don’t necessarily need to start a savings account with thousands of dollars. It’s possible to start a savings account with a small amount and build up those savings over time. The same is true when saving for a particular goal, such as buying a new car. If you consistently put a small amount of cash into a savings account with high interest rates, that amount can significantly increase over time.
