Because there are so many different types of checking accounts available, it makes sense that people wonder, do I need more than one checking account?
There are many reasons multiple checking accounts may be beneficial, but first, let’s talk about the benefits of having just one.
The benefits of a single checking account
When you have a single checking account, it is a lot easier to keep track of every dollar that goes in and out. You only have one checkbook to balance every month, and you only need to keep track of one bottom line.
Many checking accounts these days require monthly direct deposits, so in order to have more than one of these types of accounts, you would need more than one direct deposit as well.
Finally, a single checking account allows you to make the most of any rewards or APY-related benefits of that account. If you have $5,000 spread out among multiple accounts, each with a different APY, you are not getting the most benefit out of the account with the highest APY. You could have all $5,000 in one spot, making you the most money, rather than spreading it out.
Now let’s examine why some people might have multiple checking accounts.
Why some people need multiple checking accounts
Everyone’s financial situation is unique, so it makes sense that checking account needs are unique, too.
Here are some of the reasons why people end up needing multiple accounts.
Many married or partnered couples choose to have separate accounts that they both have access to.
Couples may want to keep their money separate for countless reasons. There are pros and cons to shared and separate accounts. For example, if both parties have their own accounts, it is easier for each person to keep track of their own income and spending. However, it can also be inconvenient if a couple’s finances are too strictly divided.
One way to merge these benefits and drawbacks is to have two accounts, which both people have full access to, but only one person serves as the primary user of each account. In this case, you may technically have two accounts in your name, but you are really only using your own.
Small business owners can keep their personal and business expenses separate by having personal and business accounts.
Avoid confusion, uncertainty, and tax implications by keeping your business and personal funds separated into two totally different accounts. Even if you pay yourself out of your business account, the division is still important.
Small business owners should have a commercial account that is specifically designed to benefit business use. They should also have their own personal checking account for spending, saving, etc.
What to watch out for
If you decide that you need multiple accounts, there are some things to watch out for. Don’t get stuck in a bad situation because of poor financial management related to having multiple checking accounts.
Don’t ignore your accounts.
Even if paper checkbook balancing seems like a thing of the past, you should be doing a monthly accounting of your money in every account that you have. Ignoring accounts--even ones that aren’t used for much--is a recipe for overlooking something important and losing money because of it.
Make sure you can meet the minimum requirements of each account.
You need to know the specifics of each account. Minimum monthly balances, minimum monthly transactions, and required direct deposits are just a few of the policies that could impact your checking accounts’ usability. Don’t create a situation where you have too many accounts to successfully meet each one’s minimum requirements.
Don’t miss out on the chance to build a relationship with your financial institution.
You don’t want to be jumping from account to account so frequently that you never get to know your financial institution or the people who work there. Building a long-term relationship with your bank or credit union is a great way to find out about new savings and income-building opportunities.
Watch out for fees.
Lots of checking accounts have fees. Even if you are meeting the minimum requirements for each account, you may still end up paying extra money in fees if you have multiple accounts. Be sure to evaluate each account before opening a new one, ensuring that you’re not going to feel the sting of fees later down the line.
Are you ready to open a new checking account?
If so, come talk to us! At WEOKIE, we offer several types of checking accounts that will meet your specific banking needs. You can apply to open an account online or come see us at one of our branches.
While you’re here, check out our brand new eGuide, “How to Make Room in Your Budget for an Auto or Mortgage Payment.” This guide walks you through some great strategies to ensure that when you’re ready to buy your next home or car, you are ready to take on the monthly loan payments!