How Many Checking Accounts Should You Have?
Checking accounts provide a secure storage facility for funds used to pay bills or make purchases. To facilitate transfers between accounts, a checking account might be connected to a savings or money market account.
It's a good idea to have at least one checking account, but you can have many checking accounts at the same bank or at separate banks. Having multiple checking accounts is not illegal, there are a variety of reasons to have multiple checking accounts. The number of accounts you should open is determined by your goals and financial needs.
How Many Checking Accounts Can I Have?
A person's ability to have multiple checking accounts is totally up to them. This means that there’s no limit on the number of checking accounts you can open, You can open two or more checking accounts, whether they're with traditional banks, credit unions, or online banks.
However, the amount of money you can keep in your checking account that is FDIC guaranteed is limited. The Federal Deposit Insurance Corporation insures bank deposits up to certain limits, including money in checking accounts.
For each account ownership category, the typical FDIC coverage amount is $250,000 per depositor, each FDIC-insured bank. As a result, if you have numerous checking accounts at the same bank, as well as savings accounts, money market accounts, or CD accounts, your total coverage amount is $250,000.
The good news is that the depositor limit of $250,000 applies to individual banks. So each bank where you have a checking account would insure you up to those limits.
Reasons for Opening Multiple Checking Accounts
There are many reasons why having more than one checking accounts may be beneficial. For instance, you may consider opening more than one checking accounts if:
- Certain deposit or withdrawal transactions must be kept separate from others.
- You want to know if you can get a bonus for opening a new checking account.
- You keep a lot of money in your checking account and wish to stay under the FDIC's coverage limits.
- You want to be eligible for special privileges, such as loan discounts or greater deposit interest rates.
- You have accounts with both online and traditional banks and need a way to move money between them.
If you have particular transactions that you need to keep track of individually, having numerous checking accounts may be a suitable fit.
If you're self-employed, do gig work, or manage a small business, you might wish to have a personal checking account and a business checking account. Separating business revenue and expenses can make tax preparation easier.
Separate accounts could be useful for keeping track of specific spending. For example, if you're paying tuition and fees for yourself or your child, you could open a checking account only for paying medical bills, childcare charges, or education expenses.
Qualifying for New Checking Account Bonuses
Checking account incentive programs are one strategy for banks to attract new customers. These promos reward you with money if you open a new account.
You'll usually be required to meet specific requirements, such as keeping a particular minimum balance or making recurrent direct deposits. Opening a new checking account to qualify for a bonus, on the other hand, can be a simple method to obtain some more cash.
Managing FDIC Coverage
If you have a lot of money in your checking account, you may need multiple accounts at different banks to stay within the FDIC's coverage limits. While the chances of your bank failing are unlikely, knowing that your funds are safe might be comforting.
Some banks offer extra incentives to urge new clients to open a checking account, which may entice you to do so. If you apply for a loan or a credit card, you might be able to get a lower interest rate. If you have a checking account with a particular bank, you may be able to earn a slightly higher APY on a savings or money market account.
Transferring Funds Between Accounts
If you bank at both online and brick-and-mortar banks, having multiple checking accounts can be beneficial.
While many online banks allow mobile check deposit to add money to checking accounts, cash deposits are frequently unavailable. Depositing cash is possible in some instances, but it may be inconvenient. You can deposit funds into a traditional bank checking account, which you can then transfer to your online checking account.
Pros and Cons of Having Multiple Checking Accounts
Multiple checking accounts might assist you in managing your finances in a variety of ways. However, there are some potential drawbacks to consider.
Pros Of Having More Than One Checking Accounts
- It can be simpler to keep your finances in order.
- New checking account bonuses could be worth hundreds of dollars.
- FDIC coverage limits are easier to monitor.
- Separate accounts might help keep your business and personal funds separate.
- If you're married, having separate and joint checking accounts may make sense.
- If you primarily bank online, a checking account at a traditional bank can be an excellent backup.
Having multiple checking accounts can put your organizational abilities to the test because there will be more to keep track of. Whether you have multiple checking accounts at the same bank or at other banks will determine how easy or difficult this is.
If you have all of your checking accounts with the same bank, you can manage them all with online or mobile banking. However, if you have multiple checking accounts with different banks, you may need a budgeting application that you can link with each of them to make tracking deposits and withdrawals easier.
Cons Of Having More Than One Checking Accounts
- When it comes to tracking deposits and withdrawals, multiple checking accounts can be more difficult to keep track of.
- If you don't keep track of each account carefully, you can end up with an overdraft or other charges.
- For several checking accounts, monthly maintenance fees can quickly pile up.
- If you don't have a lot of money in your checking account, meeting minimum balance requirements for various accounts may be tough.
When you have numerous checking accounts, it's also crucial to keep an eye out for fees. If your balance falls into the red as a consequence of something as simple as depositing a check to the wrong account, you may be subject to overdraft, non-sufficient funds, or overdraft fees. You may also have to deal with monthly maintenance fees with traditional banks, which can quickly mount up.
Keeping at least one of your checking accounts with an online bank can help you save money. When compared to brick-and-mortar banks, online banks charge fewer (or lower) checking account fees, such as monthly maintenance fees, minimum balance fees, and overdraft fees.
How Many Checking Accounts Should You Have?
The answer to the question "how many checking accounts can i have?" is primarily determined by what you require from a checking account and how you handle your finances.
At the very least, you should have one checking account where you may deposit money, pay bills, and make purchases. If you have a traditional bank account, you might want to consider opening a second checking account with an online bank to reduce fees.
When deciding how many checking accounts to open, consider what you'll need each checking account for and how you'll use it. Then think about what you'll need to do to keep track of those accounts.
How to Manage Multiple Checking Accounts
There are a few techniques to make handling multiple checking accounts easier if you have more than one.
First, if you haven't already, sign up for online and mobile banking for each account. You may check your balances, arrange bill payments, and transfer money between accounts from anywhere with online and mobile banking. You can also add money to your accounts without going to a branch by using mobile check deposit.
Secondly, set up alerts for each account. This can help you avoid fines and reduce the chances of bank fraud.
You could, for example, set up low balance alerts to notify you when your account balance falls below a specified level. This may aid in the avoidance of overdraft charges. You can also set up alerts to notify you whenever a debit transaction posts to your account, ensuring that you are aware of any unauthorized withdrawals or purchases.
Finally, evaluate your accounts at least once a quarter to ensure that they continue to meet your requirements. Examine your transaction history to discover how often you use each one. Examine any fees you're paying, as well as any incentives each account offers, such as loan discounts or charge exemptions.
Consider if you want to keep a checking account open or close it if it appears to have outlived its purpose. Make sure you close a bank account correctly if you decide to do so. Cancel any regular activities, like as deposits or automatic withdrawals and transfers, and shred any checks or your debit card that remain.
After you've completed those steps, contact your bank to confirm that the account has been closed and that no new transactions can be permitted in the future. This can assist you avoid incurring any charges for returned items by accident.