Here Are the Pros and Cons of Owning 2 Bank Accounts
KEY POINTS
- Having two bank accounts can boost your $250,000 FDIC-insurance limit.
- It can also help you organize, keep you flexible, and increase your earnings.
- However, it can lead to extra hassle and possibly more fees to track.
Your partner wants to open a new bank account with a different bank, but you like your old one best. Should you close your old account? Keep it open? It's questions like these that make banking nerds like us quake with excitement. In short, there are pros and cons to each option.
Keeping two bank accounts open gives you flexibility and security. But it also makes tracking your money more complicated. And if your banks charge fees, you could pay double. Read on for a more in-depth dive into the pros and cons of owning two bank accounts.
Pro: Flexibility
Keeping two accounts open allows you to use one when the other breaks down. Sometimes, banks have issues. They close your account for no reason you can tell. Next thing you know, you can't access your money for weeks!
But having a backup account gives you flexibility.
Our Picks for the Best High-Yield Savings Accounts of 2024
Capital One 360 Performance Savings
APY
4.25%
Rate info
See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of April 11, 2024. Rates are subject to change at any time before or after account opening.
Min. to earn
$0
Open Account for Capital One 360 Performance Savings
On Capital One's Secure Website. |
APY
4.25%
Rate info
See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of April 11, 2024. Rates are subject to change at any time before or after account opening.
|
Min. to earn
$0
|
CIT Platinum Savings
APY
4.85% APY for balances of $5,000 or more
Rate info
4.85% APY for balances of $5,000 or more; otherwise, 0.25% APY
Min. to earn
$100 to open account, $5,000 for max APY
Open Account for CIT Platinum Savings
On CIT's Secure Website. |
APY
4.85% APY for balances of $5,000 or more
Rate info
4.85% APY for balances of $5,000 or more; otherwise, 0.25% APY
|
Min. to earn
$100 to open account, $5,000 for max APY
|
American Express® High Yield Savings
APY
4.25%
Rate info
4.25% annual percentage yield as of September 12, 2024
Min. to earn
$0
Open Account for American Express® High Yield Savings
On American Express's Secure Website. |
APY
4.25%
Rate info
4.25% annual percentage yield as of September 12, 2024
|
Min. to earn
$0
|
If you open two checking accounts, you can boost your maximum ATM withdrawals. Banks set withdrawal limits independent of each other. Say one bank limits you to $100 daily, and the other limits you to $200 daily. You can drive to two ATMs to withdraw $300 total daily.
Finally, you can boost your earnings by transferring some money to the account with a better interest rate. The better your rate, the more you can earn.
Pro: Security
The FDIC insures bank accounts up to $250,000 per bank. Banks are insured separately. By spreading your deposits around multiple checking accounts, you can protect more of your savings. If your bank fails, the FDIC will return your savings up to the limit.
With two savings accounts at separate FDIC-insured banks, you can insure $500,000 worth of deposits. The more bank accounts you open at separate FDIC-insured banks, the more money the FDIC will protect. Owning two bank accounts is a smart way to keep your money safe.
Pro: Organization
You can open two savings accounts to keep money organized. You can designate one account as your emergency fund and the other as your vacation fund. It's extra work, but it could be worth the effort if it brings you peace of mind.
Tip: Use a bank that offers bucketing to stay organized and keep your bank accounts to a minimum. Bucketing lets you split your money into designated categories without forcing you to open multiple accounts at separate banks.
Con: Hassle
Keeping two bank accounts open can be a hassle. It's one thing to own a checking and a savings account -- those pair together like peanut butter and jelly. They serve different needs. But two checking accounts? That's where things can get complicated.
Take direct deposits. If you share finances with a partner, you both must decide whether to split deposits between multiple accounts or use one as the main account. Sending money between accounts could take days as deposits settle. In short, owning two bank accounts is a hassle.
Con: Fees
If one or more of your bank accounts charges maintenance fees, you're paying more than you would with only one account. It's the most straightforward con on this list. You can also avoid it by sticking to the best savings accounts -- most won't charge you maintenance fees.
Other fees matter, too. Some savings accounts impose account minimums, and these may charge you for leaving too little money in your account. Some checking accounts charge overdraft and insufficient funds fees for overdrawing your account.
The more bank accounts you own, the more fees you must track. Good news: the best checking accounts keep overdraft fees to a minimum or skip them entirely, so there's that.
Should you own two bank accounts?
Yes, if you're pairing a checking and savings account. Otherwise, it's more complicated. If you want greater flexibility and security, opening two accounts of the same type can give you that. To avoid hassle and fees, consider sticking with one account per type.
If you open a second bank account and change your mind, beware of closing the account too soon. Bank accounts sometimes charge early account closure fees of $5 to $50 when you close an account within 90 days of opening it. Keep your account open for a bit longer to avoid paying fees.
You may benefit from owning two or more of the same type of bank accounts. It doesn't hurt your credit score, and it's a common practice. Weigh the pros and cons to decide whether owning two or more accounts is right for you.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent, a Motley Fool service, does not cover all offers on the market. The Ascent has a dedicated team of editors and analysts focused on personal finance, and they follow the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands.
Related Articles
View All Articles