The Pros and Cons of Having Multiple Bank Accounts

by Kevin on March 27, 2013

Two questions for you today.

  • Do you want your life to be simple or complicated?
  • Do you want more interest on your deposits or less?

If you are like me you feel busy all of the time so the less complicated life can be, the better.

On the flip side, who wouldn’t want more interest on their bank deposits?

Unfortunately, chasing the highest interest rate return can make your life more complicated because you may have to switch accounts or open up a second or third account elsewhere.

Is the extra interest worth the added complication in your life?

The Upside to Having Multiple Bank Accounts

The ultimate goal of having several bank accounts is to get the most interest possible. You want your money working for you, and I like to make my money work especially hard.

That means the most interest earned whenever possible.

This only really works if you have a hefty sum of money to store in a bank account. The difference between 0.80% interest and 1.5% on $1,000 is meaningless.

But if you do have money sitting around that needs a productive home, and you can handle the added chaos of having multiple accounts, then getting several accounts can pay off.

The Downside to Having Multiple Bank Accounts

That having been said there are some definite issues that come up when having multiple bank accounts.

Multiple Bank Account Logins

First, you have to remember several more logins if you are going to try this. Thankfully there are many password/login remembering programs such as LastPass that will store all of your username and passwords online, leaving you only to remember one main password to your “password vault”. The downside to this? You have to trust the company storing your passwords.

Multiple Requirements to Meet

Another issue that crops up specifically with reward checking accounts is instead of having to meet the minimum requirements for one account, you now have to meet them across all of them in order to get the most interest on those accounts.

Most reward checking programs have requirements like 10-12 debit card swipes, direct deposit or bill pay each month, and electronic statements.

Multiple 1099-INT Forms

A smaller issue is you have to remember to wait to file your taxes until you have a 1099-INT from each bank or credit union you have an account with. This shouldn’t significantly delay your taxes, but you should probably double check to make sure you have gotten them all before you send your tax return off.

Banks Can Change Rates on a Whim

The absolute biggest downside is that banks can change interest rates on a whim. Whether you are going for a reward checking account with special requirements needed to get the higher interest rate or simply opening up an online savings account with a bank that currently has a higher rate, there is always the risk the bank can lower the rate without any notice.

When that happens there is nothing you can do except sigh, accept the lower rate, and move on.

In my next post we’ll discuss when it makes sense to open that next account and when it makes sense to pass up the opportunity for higher interest rates. 

Until then let me know if you have any questions about having multiple bank accounts.

{ 1 comment }

Caesar F March 29, 2013 at 12:36 pm

So what weighs more; the pros or cons?

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