Are multiple savings account worth your time, money, and efforts? A lot of people wonder whether it is worth it or not. On one hand, there are some financial experts who say that one should stick to a single savings account. While others say that having multiple savings accounts for various saving targets are a better choice. You can adopt any of the two pieces of advice to grow your finances. As long as you keep building your wealth, you are okay irrespective of what you choose.
If you have more than one financial goal and have a hard time tracking them down, it makes sense to have multiple savings accounts. In fact, it can actually teach you to handle your savings in a better way. Of course, it is up to you what you want to choose. But, to help you choose better, here is a list of pros and cons of multiple savings accounts.
Pros Of Multiple Savings Accounts
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#1: Chasing Several Financial Goals At The Same Time
If you have several financial goals, it makes sense to open multiple savings accounts to track their progress. For example, this year you might be looking to buy a house, go on a vacation and have an emergency fund. So, you open three savings accounts for these purposes. You put in money in each of them every month and easily track its progress so that you can stay right on track.
#2: You Need To Separate Your Money From Your Savings
It's always a good idea to keep an emergency fund handy. Separating some money from your savings account to set up such a fund is a wise idea. But make sure it is easily accessible.
#3: High Balance Accounts
If you do a little digging, banks in our country do not offer much in terms of risk cover. If you have high balance accounts, you might consider spreading your money around to keep it safe. In case a bank goes under, it could take some time to retrieve your money. In that case, this would be a good idea.
#4: Multiple Perks
Different banks offer different perks. Some offer greater discounts for shopping online. While on the other hand there are some banks who offer rewards based on purchases made on debit and credit cards. With so many benefits at stake, it makes sense if you want to open multiple bank accounts. This is a better way to get the most out of what everyone has to offer.
#5: Gauge Their Services
Having multiple savings accounts can truly help you gauge the services provided by the different banks. It could ultimately help you choose a handful of banks that you deem best to handle your money.
#6: Frequent Withdrawals
All banks have limits on withdrawals. But, do you want to make frequent withdrawals? Or do you often have to withdraw more than the stipulated daily limit? If the answer to both these questions is yes, then having multiple savings accounts can help you out.
Cons Of Multiple Savings Accounts
Everything on this planet has its own set of advantages and disadvantages. While the advantages of having multiple savings accounts are certainly great, you should also look at the downside. This will help you in making informed decisions.
#1: Hard To Reach Minimum Balance
Every savings account has its own minimum balance requirement. If you open up multiple savings accounts, you need to maintain the minimum limit on every account. Otherwise, you will not be able to earn interest. And, in some cases, you might also be penalized for not maintaining the balance.
#2: You Might Lose Interest
Some banks offer higher interest rates on a larger balance. Spreading your money around will cause you to have smaller balances on multiple accounts. Hence, there might be a chance that you are losing out on the opportunity to earn more interest.
While multiple savings accounts are opened to dispel confusion and help tracks goals, it can also create more confusion. With so many accounts it might become hard to track where to put in money and what to do. Taking financial decisions might come to a complete stop due to this.
#4: Losing Money
If you are not very good at tracking your finances, having multiple savings accounts might not be a good idea. You might end up losing money or worse, forget that you had opened other accounts in the first place.
#5: Higher Fees
Almost all banks charge money for letting you save your money. These are usually SMS fees or ATM fees and it differs from bank to bank. When you are opening multiple savings accounts you are also increasing your expenses. Now, you have to pay multiple fees for multiple banks.
#6: One Bank, Multiple Accounts
Some banks offer better rates if you open multiple accounts with them. So, in that case, it would be a very bad idea to open multiple savings accounts with multiple banks. Instead, opening most of your accounts with one bank might lead to a better banking relationship.
Ultimately, your aim should be to build as much wealth as possible and avoid debt at all costs. You should save as much money as possible for your future so that you can fall back on it when needed. If you feel that your needs dictate that you open multiple savings accounts, then you should go ahead and do it. On the other hand, if you feel that there is no need for doing so and you are satisfied with your current bank, then you can let it be.
Would your finances be better off if you had multiple savings accounts? Or would it be worse? Here are all the pros and cons of having several bank accounts.