How many bank accounts do you have? If you’re a die-hard customer with a certain bank simply because it has a branch location that’s nearby, fantastic! However, you might be short-changing yourself financially in the long run.
Before I get started, I want to say that having one bank has its advantages too – the biggest being that it keeps your finances uncomplicated. With all of your money in one bank, you don’t have to juggle numerous log-ins or remember how much you have in X account at X bank.
On the plus side, accounts with multiple banks have their advantages as well – here’s why:
Because You Have Multiple Financial Goals
Having multiple financial goals is a good thing. But keeping the money to support ALL of those goals in one or two accounts with the same bank might not be such a good thing.
Let’s suppose you have a current and a savings account with the same bank. Your monthly pay check is deposited into your current account every month and any remaining amount after the bills and utilities are paid goes into your savings account.
But if you have multiple financial goals, keeping most of your savings in one account poses one major problem – there’s no clear segregation! Your emergency fund (please tell me you have one!), liquid savings and what you use for leisure spending (ex. Savings for a yearly family trip) all occupy the same account!
This arrangement might work for some people, but for many of us, it’s just too tempting to overdraw on one “goal” to feed another (yes, I’m talking about feeding your leisure spending with your emergency fund/liquid savings).
But if you have multiple bank accounts, you can separate your money into accounts for very specific purposes such as:
- Your Wedding
- Emergency Fund
- Annual Holiday
- Personal Spending
- Home Loan Down Payment
The point is this – you divide and conquer your financial goals by having specific accounts dedicated to them. That way, you don’t have to worry about accounts “bleeding” into each other because they’re all in one or two big accounts.
Because You Can Get Access to Better Financial Products (and Perks)
Do you think that banks offer you the best interest rates on your accounts and the best financial products just because you’ve been a loyal customer for years?
Well, I’m sorry to say this, but there’s a good chance that your older savings account that was opened years ago might not be earning as much interest as accounts offered to new customers at other banks (or even your own – check for yourself).
But you won’t know that unless you check to see what the other banks are offering in terms of financial products, services and perks for new customers.
Having multiple accounts with different banks can give you access to better products (and perks) such as:
- Savings accounts with better interest rates and even free insurance coverage
- Access to better home loan packages
- Access to better home loan refinancing packages
- Access to better personal loan packages
- Access to better foreign currency exchange rates
- Access to bank-specific rewards such as cashback
- Ability to use ATM machines from multiple banks (great for bypassing queues)
- Ability to earn perks for opening a new account such as luggage, watches, etc.
- Access to bank-specific rewards such as cashback and dining/retail deals and discounts (Credit/Debit cards)
When you become a customer with multiple banks, you gain access to all of the above. And that can end up saving you some major dollars – especially when it comes to financial products such as loans and earning higher interest on savings accounts.
Things to Consider When Opening Multiple Bank Accounts
Should everyone have multiple bank accounts? That depends. If you’re not very organised and absolutely cannot keep track of where you have your money, it might be better for you to just stick with one bank.
For example, if you happen to have much of your savings in an account that offers decent interest rate on a very high balance amount – it might be better to just leave it in there for the time being instead of opening many savings accounts with smaller interest rates.
Also, there’s the matter of confusion – if you’re a forgetful person, you might end up paying your bills with the wrong account. Also, you might forget little things such which accounts have automatic transfers – adding to your financial confusion over what account is being used to pay what bill/expense.
Finally, you’ll want to check out which current and savings accounts have fees for not maintaining a certain balance amount. Having multiple accounts with minimum balance fees of $2 to $8 a month can add up to a big amount annually.
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Tags: Savings Accounts