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Multiple Bank Accounts – The Pros and Cons

Multiple bank accounts – at the personal front, we tend to have multiple bank accounts due to job changes. One company would tie up with a particular bank and the other with another. Initially, there was a mandate by the companies to have a salary account only with the bank they’ve partnered with. But now they are leaving it to the employees.

You can either continue with any bank’s salary account or port from the previous bank to the new one. Once migrated, you must close the salary account; otherwise, the bank might convert it into a savings account. Employees with a minimum of 6-7 years of experience would definitely have more than one salary account leaving them with multiple bank accounts.

Multiple Bank Accounts - The Pros and Cons

Besides salary accounts, we tend to open different accounts, like joint accounts, fixed deposit accounts, credit card accounts, etc., to plan our finances. All this will end us in a situation of having multiple bank accounts.

Now the question for people with multiple bank accounts is, is it good to have more than one bank account? Well, the answer to this question is not that straightforward. Continue reading to get the answer to your question and also some other interesting facts related to multiple bank accounts.

How Many Bank Accounts Should I have?

There is no such rule that states an individual needs to have only these many salary or savings accounts. However, as per many financial experts, it’s good to have up to 3 savings accounts and not more than that. While having more than one savings account is recommended, limiting the number to three makes it easy to manage and track the accounts.

Types of Bank Accounts One Can Have

Planning and organising the accounts in such a way that they help you maintain financial disciple is the key. When you have three savings accounts, you need to assign each account for a purpose to utilise them better. Here are a few tips for organising your multiple bank accounts.

  • Salary Account or Main Account: Most people have salary accounts or bank accounts in which their main income gets credited. Make sure you have only one such account. Due to job changes or for some other reasons, if you have multiple salary accounts open, close the non-operational account or convert it to a savings account. Ultimately, you must have only one salary account.
  • Savings Account: One major financial mistake we all make is saving after spending. First, we spend from our income, and whatever remains, we call it savings. According to financial experts, we need to do the opposite. We need to save a fixed monthly amount and then plan our spending with the remaining amount.

If we save and spend from the same account, we might tend to use our savings when needed. To prevent such situations, we need to have a separate Savings Account into which we must auto-transfer a fixed amount at the very beginning of the month.

  • Joint Account: For married couples, having a joint account helps to plan their expenses properly. Open a joint account with you and your spouse as the joint account holders. If both of you contribute to the monthly household expenses, both must transfer a fixed amount every month, and all the expenses should be done from the joint account.

Joint accounts can also be used to save money for a goal. Let’s say you plan to purchase a house, and you and your spouse are saving for the down payment. You want to save money to go on a holiday, buy a car, for kid’s education, etc. For all such combined savings, joint accounts are of great help.

You can also have a joint account with your children to save money for their future expenses like education, marriage, business, etc.

Perks of Having Multiple Bank Accounts

If you have multiple bank accounts, you can also enjoy the following benefits.

  • Better financial planning: As mentioned above, having multiple bank accounts helps you to organise your income and expense flow properly. You can achieve the financial goals of your family using joint accounts.
  • Reduced dependency on one bank: If you have only one bank account, you depend on that bank for everything. May it be an ATM withdrawal, UPI transfer, internet banking, auto-debit, or any such banking operation.

If the bank servers go down, if the bank ATMs run short of money – you don’t have any other option besides being in a no-cash situation. Instead, if you have multiple bank accounts, you can use another account in case the main account faces any issues. 

  • Access to more liquid cash: With one savings account, you will have one debit card, and you can withdraw only a certain amount on a daily basis. If you need more cash, you must wait for the next day. Having multiple accounts solves this problem.

Cons of Having Multiple Bank Accounts

If you have multiple bank accounts and are not using them properly, you may have to face the following difficulties.

  • Increased maintenance costs: Except for salary accounts, all other bank accounts require you to maintain a minimum deposit. If you fail to maintain, the banks will levy penalties. Prolonged inactivity makes an account dormant. Also, the debit cards that come with the bank account attract an annual fee. All this will increase the maintenance cost of having multiple bank accounts.
  • Difficult to manage: With more bank accounts, tracking and monitoring all the accounts becomes difficult. Unused accounts are breeding grounds for cybercriminals. They might use such accounts to make illegal transactions.

To sum it up, having multiple accounts is purely an individual choice. It is based on how you plan your financials. But when you have multiple accounts, make sure to maintain them properly to avoid any problems. You can use some online tools to manage your multiple accounts efficiently.

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