You’ve got a lot of financial goals, from paying down your debt to eventually saving up to buy a house. It can seem that having a variety of bank accounts— one earmarked as your emergency fund, one for your down payment, and one for vacations, can be a good idea. But, it’s also possible that too many accounts is too much hassle. There’s no hard and fast rule when it comes to opening accounts. Having several accounts at different banks or credit unions might be the perfect option for one person, while another might prefer to keep things simple and to only have one savings and checking account. If you’re trying to decide if you’re a single bank account or a multiple bank accounts type of person, there are a few things to think about.
Different Accounts for Different Goals
One reason for having several accounts is so that you have a different spot for each of your financial goals. If you have several savings goals, but only one savings account, it’s too easy for all the money to get jumbled together and for you to forget how much in the account is allocated to one goal and how much towards the other. Keeping multiple accounts can also help you differentiate between “for emergencies only” money and “fun” money. For example, keeping your emergency fund separate from your travel fund means you’re less likely to dip into your emergency savings when it’s time to pay for vacation.
A disadvantage of keeping several accounts open is that it’s easier to lose track of where your money is. It can also be more of a hassle to have several bank accounts, spread across institutions. You might find that you’re constantly moving money around, depositing $100 into your travel fund or moving $200 from your clothing account to your checking account when it’s time to spruce up your wardrobe.
Another interesting drawback of multiple accounts is that they make it easier for you to trick yourself, according to MarketWatch. When your money is spread thin over several accounts, it’s easier convince yourself that you can withdraw some from one account and spend it, as you have plenty of other accounts open.
Look Out for Fees
More accounts can mean more or higher fees if you’re not careful. For example, if you have five accounts at different banks and each account charges a $5 monthly fee, you’ll end up spending $400 per year just to keep those accounts open. Five dollars might not seem like much, but it adds up when multiplied by several banks. You can avoid fees not only by limiting the number of accounts you have, but also by making sure to read the fine print before you decide to open a new one. Try to choose banks or credit unions that don’t charge regular fees and that don’t require you to keep a specific amount in the account to avoid the fee.
When it comes down to it, whether multiple accounts are too many really depends on your personal preferences and goals. If you find yourself regularly dipping into your savings because you have them spread out over several banks, try consolidating all your accounts into one and see if that helps you curb spending. Keep in mind that the team at CESI Solutions is here to help you work towards your financial goals and discover the options that help you the most.
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