Monday, 9 December 2019

It's great to have an account at a bank you love. But opening multiple deposit accounts could help you keep your money organized and working its hardest for you.

There are a few reasons that people maintain multiple accounts, including organization, goal-setting and earnings rates. If you share finances with a partner or other person, privacy and independence could also come into play.

Two checking accounts

If you have a basic checking account, the simplest next step you can take is to open a second checking account. Why would you do that?

A second checking account could help you keep money aside for a specific spending purpose. For example, if you put your mortgage on autopay, you'd want to be sure that your account balance never gets too low to make that important monthly housing payment. You could watch that account like a hawk, or you could give yourself some peace of mind by setting up a second checking account where you deposit a set amount each month for cash withdrawals, debit card spending, etc. That way, you can never accidentally spend your mortgage payment.

Multiple checking accounts can also be helpful for couples who share some expenses but also maintain some spending independence. For example, you and your spouse could have a joint account from which to pay the rent, while each is maintaining a private account for personal expenses such as clothing or car payments.

One checking account, one savings account

Another way to use separate accounts to organize your money is to designate your checking account for spending, while establishing a savings account for, well, saving. Since your savings account won't have a checkbook, you'll need to proactively transfer money over into your checking before you can spend it — a conscious act that could help you avoid running through those savings on impulse. A savings account is an effective place to park an emergency fund since you can access it quickly if needed, but not quite as easily as funds in your checking account.

To help you make progress towards a savings goal, whether it's a vacation or a down payment on a car, set up an automatic deposit, for instance, moving $100 of each paycheck into savings.

One checking account, one money market account

But what if your savings goal is a lofty one, that will take you some time to reach? You may want to look into adding a money market account to the mix, to help your savings grow over time. Money market accounts often offer the best of all worlds, with convenient access to your money as with a checking or savings account, but at higher interest rates than many savings accounts.

Keep in mind, however, that money market accounts may come with more rules than the typical savings or checking account. Because they often require a larger balance, they are popular for savers with a larger amount of cash to deposit. The number of checks or other transactions you can make with a money market account may be limited.

To top off these benefits, some banks offer discounted loan rates or bonus rates on deposits to holders of multiple accounts. Whether your goal is to get your financial ducks in a row, to save up for a big purchase or to earn a better interest rate on your savings, opening a second account at your bank might help you achieve it. 

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