Should You Open Multiple Accounts To Protect Your Money?

Why I Have Money in four Banks

The question for many people these days isn’t whether they should have more than one bank account, but how many bank accounts is best. Most people will get a bank account in high school or shortly after moving out of their parents’ house, but over the years people often find reasons to get more than one bank account. Making it more difficult to be susceptible to identity theft and a total loss of savings pushes many people to get more than one account.

Having more than one bank account offers advantages and benefits, and many couples and individuals have 5 or 6 accounts that might be held with different banking institutions. At a certain point, people tend to start wondering how many bank accounts they need, and whether having so many accounts is a safe way to hold the family’s money.

One of the reasons that some people will open another bank account is because they want to get a better interest rate on savings. Interestingly, research suggests that online banking usually offers slightly better rates for interest on savings accounts. However, most banks today don’t offer a tremendously higher rate than other institutions, so it might be a waste of time to open another bank account just for a better interest rate.

In addition, sometimes getting more bank accounts may make it more difficult for the account owner to keep up with all of the terms and conditions of each account. The fine print for bank accounts tends to be quite lengthy. Whenever a person decides to open a new bank account, making sure that all of the fine print and details have been read is necessary, but it can become confusing with half a dozen bank accounts.

Even if a depositor feels that opening a new checking account would be the safe thing to do, there are some advantages to sticking with just a single account. Managing just a single account takes a lot less time and it’s easier to keep track of that account, and whether it’s been hacked or not. It’s essential for a bank account holder to check on the account activity in his account frequently, but this can be a real hassle with a half dozen accounts. That being said, multiple bank accounts do have their place.

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Although a bank does have a responsibility to keep the funds in a person’s account safe, this doesn’t mean that all of the responsibility lies with the bank. An account holder must also check on the account on a regular basis to make sure that nothing strange has happened or that any mysterious debits have occurred. If a bank account has an unauthorized transaction that isn’t noticed for a few months, it could be very difficult to get that money back.

One of the reasons a person might want to deal with multiple bank accounts is when there is a small business which requires a bank account. Keeping personal accounts separate from a business account is a good idea. The Small Business Administration recommends that the safest way to operate a small business and its funds is to keep that money separate. A small business owner doesn’t want his personal funds to become liable for business costs.

In some circumstances, having more than one bank account is a smart move, but it does require extra vigilance to ensure the safety of the family’s money. Although multiple bank accounts could keep some money safe in the event of bank failure or identity theft, the prospect of a bank failing is quite remote.


Author Bio: Ryan Harris is a freelance copywriter and marketing consultant who works with small businesses and start-ups to design effective social media strategies to jumpstart brand growth. He has worked extensively with both B2B and B2C clients on marketing strategy with a focus on product introduction. He spends his free time reading tech news and supporting his favorite sports teams.

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Leave a Comment:

DC @ Young Adult Money says October 15

I opened a separate account for my small business, not to protect my money but because it just made life easier. I don’t think dividing up your money between accounts will make you too much safer, but if you have hundreds of thousands or millions of dollars it probably can’t hurt. For the average person I’d say you are fine with one account.

John S @ Frugal Rules says October 15

We have separate accounts for our business as you really do want to keep that separate from your personal finances. We also have a number of different savings type accounts for our targeted saving which makes it easier for us to manage. I think it really is up to each individual as to what is better for them. You also want to keep in mind any FDIC protection issues if you’re bumping up against those levels in any one account.

Matt Becker says October 15

I think you should put your savings with an organization that pays a fair interest rate, but it’s a waste of time and effort to constantly chase the best rate. Beyond that, keeping business and personal separate is really a must and making sure you’re within the FDIC insurance limits is also important.

FI Pilgrim says October 15

I’ve only got 3 accounts, a personal checking/savings with one bank and a business checking with another online bank. I like to keep it as simple as possible and don’t chase after high interest rate accounts.

Stefanie @ The Broke and Beautiful Life says October 15

I’ve switched pretty much entirely to online banking. It’s not just interest rates that are better- no annual fees and free atms, so it adds up to be quite a significant chunk of savings.

Michelle says October 15

For our personal finances, we just have one savings and one checking. I’ve never really thought about going beyond that.

Broke Millennial says October 15

I have two checking accounts and one savings account. I’ve considered another account for freelance income (which I don’t need to live off because it’s a side hustle), but for now I just dump it all into savings and track how much I earned in a spreadsheet. I love my bank, so I have little motivation to look at opening accounts at other institutions.

moneystepper says October 15

Sometimes, having several accounts can also be beneficial for earning better interest rates, as banks often have an introductory rate which pays a much higher interest rate but only up to a fixed deposit amount each month, for example.

Jane Savers @ Solving The Money Puzzle says October 15

I have a small chequing account at a different bank just in case my main bank is hacked. It has no fees attached. That is the same reason I carry a Visa, MasterCard and Amex. If one network is down I can always rely on another.

Clarrise @ Make Money Your Way says October 15

I have one savings account and one online account but I’m planning to open an account for my daughter in a different bank. Before I only have one account but it just happened that I don’t have any cash and the bank was offline! So for me that was a big lesson for me.

Tanya says October 16

We aren’t too concerned with our money like this. We do have one checking account and one savings account. Its just easier to save when its in a different account and not as accessible to spend.

Daisy Coleman says October 16

This is a good idea, I’ve never considered that it’s a good idea to spread money across accounts because of fraud etc. I’ve historically kept money in different accounts because it helps me manage my money, for example direct debits in one account, general spending in another, savings in another.

Jack @ Enwealthen says October 17

We use multiple accounts at the same credit union to simplify savings allocations – long term savings, financial freedom, charity, etc. with the rest going to necessities. Every paycheck gets split into the buckets. Then come spending time, if we don’t have the money in the account, we don’t buy.

Think of it as an upscale version of budgeting by envelope.

This way you always know that you’re putting the money in the right place, and forcing yourself to face the pain before you spend rather than when you get the credit card bill in the mail.

Kayla says October 17

I read once that from a purely psychological perspective, people tend to spend more when they have more savings accounts open. A few hundred there, maybe a thousand here … leads you to believe you have more cash than you actually have. I’m not sure of the whole study, but it sounds like it makes sense.
I have a few savings accounts, two connected to my brick and mortar bank: baby emergency fund and travel fund, and then my Smarty Pig account, which I open and close goals sporadically based on my goals at the time in my life. I think thats enough for me, and even if I could find a slightly better interest rate at another bank account, I don’t think it’s worth it. I’m probably going to be more financially successful focusing on saving more each month and keeping organized than I am with a hypothetical .3% increase in interest earnings.

Jon @ MoneySmartGuides says October 26

I have multiple bank accounts. One is for personal and the other is for my business. If I didn’t have the business, then I would just have one account. I don’t see the need of having multiple accounts otherwise. It would just be more work for me to balance them each every month.

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