5 Reasons Why You Might Want to Open More than One Savings Account

We all have things we’re saving for, and — let’s face it — anything that might help us reach our goals faster and easier is worth considering.

Nowadays, many of the best banks (particularly online banks) offer perks like competitive interest rates and no minimum balance requirements on their savings accounts, which can help make the process of saving more rewarding. But is that all you can do to maximize your savings?

Not necessarily.

I love keeping more than one savings account, in part because it helps me to visualize my goals. When I look at the names of each of my savings accounts, I remember why I’m putting away $25 or $50 or $100 a month for each future need. It’s a motivational tool.

There are several compelling reasons to stash your savings in more than one account, and possibly at more than one bank.

Why you should consider opening more than one savings account

Saving doesn’t need to be relegated to a single account, but you may not have thought of all the potential benefits of multiple savings accounts. Here are some of the reasons you can supercharge your savings through opening more than one savings account.

1. Organize and automate savings for multiple goals

Keeping your savings in multiple accounts is a great way to save for multiple goals. Keeping all of your savings in the same place could lead to overly high balances, making it hard to track how much you’ve accumulated for different goals.

Multiple accounts may seem complicated, but they actually make it simpler to organize your savings. Sinking funds, or accounts where you sock money away for upcoming expenses like new appliances or vacations or your next vehicle, are one way to think about your savings accounts. There’s also your emergency fund, which you need to keep separate and only withdraw money from in a real emergency.

I’ve always loved the concept of creating different saving accounts, whether at the same banking institution or not. It’s fun to create names for them based on their purpose. I once had a savings account titled “Riviera” because the French Riviera was a dream travel destination at the time, and every time I logged into the account, I could see the balance and imagine myself on that trip. (I’ve since learned the Riviera’s not really my style, but I’ve been to Paris a few times!)

You might open up savings accounts designated for any of the following:

• Emergency
• Travel
• Home repairs
• New car
• Starting a business
• Holiday gifts
• Wedding
• Veterinary expenses
• Fertility treatments or adoption expenses
• Other

Basically, having multiple accounts allows you to monitor each one to plan how much you need to save for each goal. You might not actively deposit into each one every month, but keep an eye on the balances so you know how much more you need.

With separate accounts, you might find it easier to automate your savings. While you can set up recurring transfers with a single savings account, multiple savings accounts allow you to assign specific amounts to deposit on a weekly, biweekly, or monthly basis. You can turn off automatic deposits when you feel comfortable with the total on a particular savings account.

2. Keep your emergency fund separate

Keeping your emergency fund separate from any other savings goals is really important. Why? Because if you lump all of your savings into one place, it might be tempting to withdraw more than you intend to, or make withdrawals for the wrong reasons. Emergency savings need to be earmarked for emergencies only.

So if the idea of multiple savings accounts for different savings goals seems too complex, at the very least it’s wise to have two accounts: one for emergencies and one for other savings

I like the idea of even keeping your emergency savings account at a different bank as a way to further safeguard that money from spending. You need that for sudden medical expenses, home repairs that can’t be postponed, or paying bills in case you lose your job, so keep a minimum amount in your emergency fund if possible.

3. Take advantage of multiple bank bonuses and perks

You can often access different bank account bonuses or perks by opening up more than one savings account. You may love the APY at one online bank, but also like a different bank for its in-person features or an extensive ATM network. Plus, some high-yield savings accounts may offer a cash bonus or other benefits upon signing up.

Let me tell you, I research and write quite a bit about financial products like high-yield savings accounts, and I’m always on the lookout for a new one to try out. It requires some organization, of course, but it’s exciting when I come across a HYSA that has a feature or bonus I’d like to access.

Opening several savings accounts enables you to explore the features of more than one bank and discover if you prefer a certain bank to others. When you want to choose the best savings account, there’s no harm in testing out more than one option, and you’re not obligated to keep an account if it’s not serving your needs (for example, if it charges a monthly fee or you can’t meet the minimum balance requirement).

4. Ensure full FDIC protection

When you open more than one savings account, you give yourself more room to receive full FDIC protection on your money. Savings is money you need to protect, so if you have savings balances above $250,000 in a single account, you risk losing some of it.

The FDIC ensures that the first $250,000 of your money is protected in case the bank goes under. That’s $250,000 per depositor, per insured bank, for each account category.

So by having different types of accounts (savings accounts and CDs would be different categories, for example), you spread out your risk. Plus, if you and your spouse each have a separate savings account at the same bank, you’d each have up to $250,000 in FDIC coverage on your own accounts.

You can also have savings accounts at separate banks or financial institutions. Not everyone has the problem of saving enough money to exceed FDIC insurance limits, but it’s something to keep in mind!

5. Avoid exceeding transaction limits

Do you need to make a lot of withdrawals from a savings account in any given month? If so, you might benefit from having a few different savings accounts, in case some of them enforce a limit on transactions.

In 2020, the Federal Reserve changed its Regulation D, which limited “convenient transfers” from savings accounts to no more than six per month. Now, financial institutions can decide whether to enforce this rule or charge fees for transactions exceeding six per month from savings accounts.

So what this means is your bank might allow unlimited withdrawals from your HYSA, or it might cap you at six per month. You definitely don’t want to incur fees for taking out money too many times in a month.

I don’t usually make a lot of withdrawals from my savings accounts — honestly, that’s because they’re for saving and not for spending. But eventually, everyone needs to take money out, and sometimes you need more flexibility for a period of time and more than six withdrawals in a month.

If you open more than one savings account, you can skirt these limits. Maybe you have one account with features you love, but that limits your withdrawals. Your second account could be at a different bank or even the same one, but that adds six more monthly withdrawals you can use as needed.

The best online savings accounts

If you're interested in opening a new online savings account, you've got plenty of options that help increase your overall savings. And remember, you don’t have to settle for only one savings account!

Here are some of our favorites:

Western Alliance Bank

This savings account allows you to earn a 4.46% APY with a $500 minimum deposit. ⁷ Western Alliance is known as a business bank, but it offers high-yield savings accounts to consumers as well. Member FDIC.

Visit Western Alliance

SoFi Checking and Savings

Earn up to a 4.20% APY on your savings by opening a SoFi Checking and Savings account. With debit card purchases, SoFi® rounds up to add spare change to your savings balance. Plus, if you deposit at least $1,000 using Direct Deposit during the bonus period, you could receive a $50 cash bonus (which goes up to $300 if your direct deposit total is $5,000 or more).Member FDIC. ²³⁴

Read our SoFi review | Visit SoFi

Chime®

Chime account holders also enjoy no monthly maintenance fees.⁸ It also offers fee-free overdraft up to $200 for eligible members.⁹ Chime also offers a generous APY of 2.00% (as of Sept. 9, 2024)¹⁰ on its savings account, the ability to get your paycheck up to two days early with direct deposit, and automated savings features that make it simple to grow your balance.¹¹¹²¹³ Keep in mind that you must have a Chime® Checking Account in order to be eligible for a Chime Savings Account.

Chime accounts are FDIC insured through its partner banks The Bancorp Bank and Stride Bank.

Read our Chime review | Visit Chime

CIT Platinum Savings

This CIT account allows you to earn 4.55% APY¹⁴ on balances of $5,000 or more which is 9x the national average. There are also no account opening or monthly service fees. Of course, this isn’t the best option for savings accounts with balances below $5,000, but if I were planning to keep at least that much deposited for a long time, it would be a great option. Member FDIC.

Read our CIT review | Visit CIT

Potential downsides of multiple savings accounts

I have to include a few words of caution here. Even with all of the benefits of opening more than one savings account, you don’t want to go crazy with this. Know your limits, and it may be a good idea to start with just two (one for your emergency fund and one for general savings).

Can be complicated to keep track of requirements

If you’re going to have a bunch of savings accounts, be sure to get a system in place so you’re organized. A spreadsheet can help you keep track of it, but you need to at least monitor things like where the accounts are, login information and passwords, fees, APYs, and minimum balances. If you’re not willing to do a little bit of legwork, you should be cautious about opening too many accounts.

Minimum balance requirements and fees

If you select HYSAs with minimum balance requirements, be sure they aren’t too much for you to handle. For instance, if you chose the CIT Platinum Savings with its $5,000 minimum balance and you don’t plan to keep much more than that overall, it wouldn’t make sense to have several other savings accounts as well. So be aware of which accounts will drop your APY if your balance goes below the required minimum, and adjust your number of accounts as needed.

The same issue applies to fees. If you sign up for three different savings accounts that charge monthly fees, your costs add up. But if you choose fee-free accounts, it’s much easier to keep multiple accounts open and active.

FAQ

Bottom line

The best savings accounts are reliable vehicles that can help you accomplish your goals and gain financial security, and high-yield savings accounts are even better because you earn significant interest. Keeping things overly simple by having only one savings account could limit your earnings and how you manage your savings.

It’s a good idea to have your emergency fund separate from any other savings accounts, and you can even monitor your savings goals more carefully with multiple short-term savings accounts. Stick with one bank or try a few different ones to take advantage of their different perks.