App version: 0.1.0

How Many Bank Accounts Can and Should You Have?

How Many Bank Accounts Can and Should You Have?
Caroline Banton
Caroline BantonUpdated January 26, 2023
Share this article:
Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
There’s no set number of bank accounts you can or should have. Many people start with two – one checking and one savings account, since these can serve most of your basic banking needs. As you move through life and your goals and responsibilities grow, however, you may find it helpful to have additional accounts. This can help you keep your finances organized, work towards specific goals, and maximize the benefits you get from your bank accounts.Read on for a closer look at the main types of bank accounts and how they work, plus tips on how to choose the right number and mix of accounts for your needs and lifestyle.

The Three Types of Bank Accounts

Traditional banks, online banks, and credit unions typically offer three main types of bank accounts – checking accounts, savings accounts, and money market accounts. With all three account types, the money you deposit is safe: The Federal Deposit Insurance Corporation (FDIC) insures bank accounts up to $250,000 per account holder, per institution, in the event of bank failure. The National Credit Union Administration (NCUA) offers the same protection for accounts held at credit unions.Here’s a look at how each account type works.

1. Checking Accounts

Checking accounts are ideal for everyday money management. You can use this type of transaction account to directly deposit your paychecks and pay bills via check or electronic transfer. You also get a debit card that enables you to get cash at ATMs or pay for goods and services directly. Typically, you can make as many checking account transactions as you like each month.In return for all of this convenience, checking accounts may come with monthly service fees. However, you can often get these fees waived if you use direct deposit for your paycheck, maintain a certain minimum balance in the account, or use your debit card a certain minimum number of times per month.Checking accounts typically don’t pay any interest. If they do, it’s generally a nominal amount.

2. Savings Accounts

Savings accounts are interest-bearing accounts that are designed for saving (and growing) your money rather than spending it. You can open a savings account at the same bank or credit union as your checking account, or explore many of the online savings accounts now available. Online savings accounts typically offer higher annual percentage yields (APYs) than accounts offered by brick-and-mortar banks due to their lower overhead. You can generally link bank accounts for easy online transfers even if they are at different institutions.Savings accounts typically come with limits on the number of withdrawals you can make (including online transfers, electronic payments, and payments by check or debit card) to six per month. While the federal rule that limited savings accounts withdrawals to six per month was lifted in April 2020, many institutions still enforce the limit and will charge you a fee if you exceed the cap. Withdrawals or transfers made at ATMs or transactions made in person at a bank do not count toward your monthly limit.Savings accounts can be ideal for short-term savings goals, like building an emergency fund or paying for a vacation or wedding. However, APYs tend to be low. Even the top high-yield savings accounts likely won’t outpace inflation. As a result, these accounts are not ideal for longer-term goals, such as saving for retirement or a child’s college education.    Recommended: Checking vs Savings Account Differences

3. Money Market Accounts

A money market account is a savings account that also has some of the features of a checking account, such as a debit card and check-writing privileges, making it a type of hybrid account. Money market accounts tend to offer higher APYs than regular savings accounts, but often have higher initial deposit and ongoing balance requirements.A money market account could be a good fit if you want a combination of interest earnings and easy access to funds due to debit card and check features (which might be helpful for an emergency fund). As with savings accounts, many banks will limit withdrawals from money market accounts to six per month. 

How Many Bank Accounts Should You Have? 

Many people have at least two – one checking account and one savings account,  since these accounts serve different needs and purposes. However, it can sometimes make sense to have more than one of each. Here’s why.

Reasons to Have More than One Checking Account

If you live with a significant other, you and your partner may want to have a joint checking account for household finances as well as individual checking accounts for personal expenses. Another reason to have more than one checking account is if you freelance or own your own business. Having a personal checking account and a business checking enables you to separate your personal and business finances, which can make accounting easier.Having two checking accounts can also help with general budgeting. You might, for example, have one checking account for fixed expenses, like rent or mortgage, utilities, insurance, car payments, and other bills you must pay. You would use that account only for those payments and, wherever possible, set up autopay for your recurring bills. You could then have a second checking account for discretionary spending, like dining out, travel, and entertainment. This system can help ensure you have enough in your budget to pay your monthly bills and limits your “fun” spending to however much you put in your discretionary account.Recommended: Negotiable Order of Withdrawal (NOW) Account

Reasons to Have More than One Savings Account

You may want to open one savings account specifically for your emergency fund. Ideally, this should have at least three to six months’ worth of living expenses that you only touch when the unexpected happens, such as a job loss, a major car paint repair, or medical emergency. A money market account or high-yield savings account at an online bank can be good choices for your emergency fund.You may then want to have a second savings account for other short-term savings goals, like buying a car or paying for a vacation. You might even consider having a separate savings account for each one of your savings goals – just be wary of any fees or minimum balance requirements. Some savings accounts allow you to create “buckets” for different goals within the same account.

Pros and Cons of Having Multiple Bank Accounts

While there are advantages to opening multiple bank accounts, there are some downsides as well. Here’s a look at the pros and cons.
• Can keep your spending money separate from your savings• May be difficult to maintain required minimum balances
• Allows you to have an account separate from your partner or spouse• May end up paying more in fees
• Can keep emergency fund separate• More accounts to reconcile
• Can separate different savings goals• Can make it harder to stay organized

Tips for Managing Multiple Bank Accounts

Whether you have two or six bank accounts, here are some best practices to keep in mind.
  • Automating your savings If you have a checking and at least one savings account, you may want to set up your direct deposit so that a large portion goes into checking to cover your living expenses and a smaller portion goes into savings. If your employer can’t split up your paycheck, you might want to set up a recurring transfer from checking to savings for the same day each month. Making savings automatic can help you reach your goals faster. 
  • Using the right debit card If you have different checking accounts for different types of spending (such as business/personal, joint/individual, or essential/discretionary)  you’ll want to be sure you are using the right debit card when paying in-store or online. 
  • Keeping an eye on balances Regularly checking your balances (either by logging into your accounts online or using the bank’s mobile app) can help you make sure that you have enough money in your accounts to cover your payments, meet minimum account balances, and/or avoid fees.  
Recommended: How Long to Save Bank Statements

The Takeaway

How many bank accounts you should have comes down to your needs, goals, and lifestyle. Many people have at least two – a checking and a savings account. Some find it useful to have more, such as two checking accounts (one for essential spending and one for discretionary spending) and two savings accounts (one for emergency savings and one for other savings).Whether you plan to open one or multiple accounts, it can be wise to shop around and compare fees, balance requirements, and APYs to find the best options for your needs. If you’re interested in getting the best rate for your savings, Lantern by SoFi can help. With our online banking marketplace, it’s easy to compare high-yield savings accounts based on APY, fees, and balance minimums.Lantern can help you compare online savings accounts and find today’s best rate.

Frequently Asked Questions

Is it beneficial to have several bank accounts?
Are there any cons to having multiple bank accounts?
How many bank accounts can you have?
Photo credit: iStock/Panuwat Dangsungnoen

About the Author

Caroline Banton

Caroline Banton

Caroline Banton is a finance and business writer whose work has appeared on sites such as The Huffington Post, Investopedia, The Motley Fool, LendingTree, MSN, and Time. With an MBA from Johns Hopkins University, Caroline has written for fintech companies, acted as a career coach, and ghost-written for prominent thought leaders in the financial industry.
Share this article: