If you’re like most people, you probably use the same bank for your checking and savings accounts.
But believe it or not, you might be paying more in fees and miss out on the chance to earn more in interest with accounts at multiple banks.
Having multiple bank accounts might sound like financial hoarding, but the payoff may be worth it. Keep reading to learn how you can benefit from owning bank accounts at several financial institutions.
Increased access to funds
Your bank account usually allows you to access money when needed, either by transferring it electronically or by withdrawing cash in person.
But occasionally, you can run into a problem where the bank freezes your account, and the money becomes untouchable.
By splitting funds into multiple accounts, you can eliminate money stress by minimizing the risk of losing access to all your money at once.
More FDIC protection
All checking and savings accounts are limited to $250,000 in FDIC coverage. This can be concerning for those with large amounts of money in today’s banking environment.
If you have more than $250,000 in one singular account, every dollar over that amount will be unprotected if the bank happens to go under.
And while the odds of a bank failure are low, they’re not zero. Having multiple accounts can protect you from this catastrophic possibility.
Limits your spending
If you have trouble not spending all the money in your bank account, having a separate account for everyday expenses can help you reign that spending in.
In this case, you can keep your savings account at one bank and your checking account at another. You may even have a single checking account for bills and another for your spending cash.
You’ll still be able to transfer money from your savings account when needed, but you won’t be tempted to waste the funds on something non-essential.
Separates business expenses
If you are self-employed or run your own business, having a business checking or savings account can help you separate your business and personal expenses and income.
This will also simplify your finances come tax time because you’ll know where to find your business deductions.
You’ll likely be able to find a more favorable business account at a separate bank than your personal one. You also might prefer to maximize how much you’re separating the funds as well.
Maximize earned interest
Some banks offer decent interest rates on checking accounts, but these same banks may not have the highest interest rates on savings accounts.
If you want to maximize the interest on your bank accounts, you may need to keep your checking and savings accounts at separate institutions.
Do some research and see where you can find the best interest rates, which could change from time to time, then move your money to those checking and savings accounts.
If you have trouble sticking to a traditional budget, using multiple bank accounts can help you stay on track.
Instead of using one checking account for both essential and discretionary purchases, you can open separate accounts.
For example, you can transfer a set amount to your “fun money” checking account so you never overspend on things you don’t need.
Free wire transfers
If you have family in a different country, you may already know that sending money abroad can be expensive.
On average, wire transfers cost $26 for a domestic wire transfer and $44 for an international wire transfer. If you need to send wire transfers regularly, you can save money by opening a checking account with free or discounted wire transfers.
Even if they don’t have favorable terms for everything you want, you can have this account for wire transfers.
No foreign transaction fees
In most cases, your bank or credit union will charge a fee if you spend money abroad. These fees usually range between 1% and 3% of each transaction.
Some banks waive foreign transaction fees on their checking accounts, which is handy if you’re going abroad.
You can open one of these accounts before traveling, use it while you’re away, and close it when you return. Or you can keep it long-term if you have the need pretty frequently.
Multiple sign-up bonuses
Banks love getting new customers, and one of their favorite ways to reel someone in is to offer a bonus for opening an account.
You usually have to keep the account open for at least three months to earn one of these bonuses.
You can sign up for multiple bonuses at different banks, so you may end up having multiple bank accounts open at once.
Easier access to large sums of money
Most banks have a daily cash withdrawal limit ranging from $300 to $1,000. If you need to access large sums of cash, it can help to have multiple accounts to draw from.
The daily ATM withdrawal limit will apply to each bank account. If you have multiple accounts at different banks, you may be able to withdraw thousands of dollars per day with minimal hassle.
Making cash deposits
If you frequently get paid in cash, you need a bank where you can deposit those funds easily.
Unfortunately, many online banks don’t let you deposit cash, even at their network ATMs. In this case, it’s crucial to have access to a bank or credit union where you can make cash deposits.
Lower interest rates on loans
Some banks and credit unions offer lower interest rates for existing customers. If you plan on taking out a loan soon, you can become a customer and enjoy preferential rates.
For example, some federal credit unions offer payday alternative loans with lower interest rates than traditional ones.
But you must have had your federal credit union checking account for at least 30 days to qualify for one of these loans.
Having multiple accounts can help you leverage benefits from different banks and possibly make it easier to grow your wealth.
However, if you do have multiple accounts, make sure you understand how to avoid any fees. They can quickly override any perks you receive if you’re not careful.
Consider what benefits you're missing from your current bank and see if you can find a provider that matches your needs.
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