6 Signs You Need Multiple Bank Accounts
In 2021, the FDIC found that a whopping 95.5% of Americans were “banked,” meaning that at least one household member had at least one account at a suitable bank. This is the highest number of banked households the FDIC has found since it began tracking this information in 2009. That’s good for all households, but since so many Americans now have bank accounts, the next natural question is how many accounts do you need and why?
I have long been a proponent of having multiple checking or savings accounts, if only for the sake of clarity in the confusing world of household finances. But there are many good reasons to have multiple accounts. Let’s take a look at some of the most important ones.
1. The FDIC only insures deposits up to $250,000.
If you’re asking, it’s unlikely that you’ll have $250,000 in your bank account, but if you win the lottery tomorrow, you’ll want to be prepared. The FDIC insures deposits, but only up to $250,000 per depositor, per insured bank, and per account ownership category.
So if you already have $250,000 in a savings account, you’ll need new checking and savings accounts at other financial institutions to protect your money in the event of a bank failure or other financial disaster.
Our picks for the best high-yield savings accounts in 2024
American Express® High Yield Savings  Annual average 4.25%
Rate Information
Annual yield of 4.25% as of August 6, 2024 FDIC member. | Annual average 4.25%
Rate Information
Annual yield of 4.25% as of August 6, 2024 | Minimum income 1 dollar |
UFB Portfolio Savings Account  Annual average 5.15%
Rate Information
To continue to receive the highest interest rates from UFB, you should keep an eye on the rates. Sometimes banks open new accounts with higher rates. You should contact your bank and ask them to transfer your existing accounts to one of these new accounts. FDIC member. | Annual average 5.15%
Rate Information
To continue to receive the highest interest rates from UFB, you should keep an eye on the rates. Sometimes banks open new accounts with higher rates. You should contact your bank and ask them to transfer your existing accounts to one of these new accounts. | Minimum income 0 dollars |
Western Alliance Bank High Yield Savings Premier  Annual average 5.31%
Rate Information
5.31% Annual Percentage Yield (APY) is accurate as of July 11, 2024 and is subject to change at the discretion of the bank. The minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY. Minimum income $500 upon opening, max APY $0.01 FDIC member. | Annual average 5.31%
Rate Information
5.31% Annual Percentage Yield (APY) is accurate as of July 11, 2024 and is subject to change at the discretion of the bank. The minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY. | Minimum income $500 upon opening, max APY $0.01 |
2. You have a business
If you are running a business, whether it is a side hustle or a gig economy job, you need a business bank account. This will allow you to easily manage your company funds separately from your regular paycheck and simplify your taxes at the end of the year. Keep your accounting as simple as possible by setting up your accounts so that all business income goes directly into your account and all business expenses go directly out of your account.
You don’t need a specific business account for this. An additional checking account will do, but you’ll need to designate that account as a business account in your head.
3. You have children
Even if you can’t save much now, it’s never too early to start saving for your children’s retirement. It’s a good idea to open a separate savings account for each child so they can contribute when they turn 18. With interest rates so high, even just $10 a week can really add up.
We don’t know what the interest rate will be in 18 years, but if you start a savings account with $10 and put $40 in every month for 18 years, earning 5% interest, compounded monthly, your child will end up with $14,000. At age 18, $14,000 can be a huge help in getting started in life.
4. You have a savings goal
Even if you don’t have kids, most people have some kind of savings goal. Maybe you want to take a vacation to Hawaii or buy a Corvette for your midlife crisis. If you don’t have a savings goal at all, it’s hard to track your progress with a comprehensive savings account.
Instead, designating a bucket for each thing you want to save for will help you stay motivated to save. And more importantly, you can set aside money so you don’t spend your Corvette money on something stupid like emergency surgery.
5. I want to start investing
If you want to invest, you will need an investment account, which is often offered by banks. For example, some banks offer money market accounts or IRAs, which have a very low entry point and can actually help you make progress toward your financial goals.
As time goes by, you may want to explore other accounts as well. Right now, certificates of deposit are providing really great returns, so they are a gift to your future self.
6. You simply love ordering
I won’t say it in sweet terms, but personal finances can be a mess. I’m speaking from experience here. I don’t like messy books. I want an account for everything. I have an account for tax withholding for my freelance writing business, an account for my dogs’ medical bills, an account for Christmas gifts, and an account for money to invest in the future. And the reason is that my soul craves order.
Luckily, my credit union is very proactive in letting me sort my money into smaller and smaller piles as I see fit, and they don’t charge me for the privilege. If you can find a free checking or savings account that lets you put your money into buckets as you see fit, do it.
On one level, it’s more to keep track of. But on another level, it’s much easier to see how much money you have for various regular expenses, and it prevents the temptation to steal from Peter and pay Paul.
Multiple bank accounts solve a lot of problems
Of course, multiple bank accounts aren’t for everyone, but if you want to visualize how much money you have for each major expense, or put your money into separate buckets to reduce the temptation to slowly move it from Column A to Column B, multiple bank accounts are a quick and easy answer.
If you open all of your accounts at an institution that charges a per-account maintenance fee, it can get very expensive, so be sure to know what fees are being charged.
These savings accounts are FDIC insured and can earn you more than 10 times the amount of bank deposits.
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