More than 9 in 10 American families have some kind of bank account, according to Federal Reserve data, and most have checking accounts. Checking accounts are where most consumers manage transactions, whether that’s paying bills, depositing paychecks or transferring money.
Nothing restricts you from having multiple checking accounts, and there are many reasons why you might decide to have more than one. You might need one checking account for your small business, for example, and another for your personal finances. Here’s more about figuring out the right number of checking accounts to have.
Pros and cons of multiple checking accounts
Multiple checking accounts may be helpful for some people, but you’ll want to analyze the pros and cons to decide what’s best for you.
Potential benefits
Improving your budgeting: Many people have multiple checking accounts to budget better, said Sean Shahkarami, CEO at Opilio, a Texas-based data management company. You might have “an account for entertainment and shopping, a separate account for medical bills, and a separate account for groceries,” Shahkarami said.
An account dedicated to a specific expense can help you track your actual spending against your budget.
Keeping your business and personal finances separate: This not only makes bookkeeping much easier but also simplifies things come tax time.
Increasing your financial flexibility: You might find an account that offers great service or convenient branch locations but charges monthly fees. You might also find an online account that comes with no fees and pays interest on your balance. By having both accounts, you can offset the fees at one bank with interest at the other.
Maximizing rewards: Some banks reward customers for having multiple accounts, such as waiving fees or offering better interest rates across all bank accounts.
Separating your emergency fund from the rest of your budget: Although many consumers keep emergency funds in savings accounts, putting them in a checking account gives you immediate access to the money. Setting up a second checking account for emergency funds can help you track the balance and avoid unnecessary spending.
Qualifying for more federal protection: Federally insured banks and credit unions cover up to $250,000 per depositor, per ownership category. If you have multiple accounts, you may qualify for additional insurance coverage if your funds are deposited in different ownership categories and the requirements of each category are met.
Potential drawbacks
Managing multiple accounts: Some consumers have a hard enough time keeping up with one checking account. Having multiple accounts only multiplies the time you must spend tracking your purchases, deposits and withdrawals.
Meeting minimum balance requirements: Many banks require you to maintain a minimum checking account balance to avoid fees. If you have multiple accounts with this requirement, you may struggle to keep up with the balances. This is especially true if you have limited funds to devote to each account.
You might face overdraft fees or monthly charges “if you neglect to maintain the minimum balance required to waive the fees,” said Hazel Secco, founder and president of Align Financial Solutions. These fees can add up if you don’t keep a close eye on your balances and activity with each account.
Protecting accounts from hackers: All bank accounts face the risk of being hacked. The more you have, the higher the risk.
Managing multiple checking accounts
Having more than one bank account obviously means you’ll have more accounts to manage. This can get tricky if you don’t stay on top of each account.
Your first order of business is to ensure that you keep a record of all transactions for each account, either through old-fashioned checkbooks or modern account management software and apps. Dedicate certain days or times of day to review each account, and be sure to check these items:
- Record new debits and credits for each account.
- Check the current balance on each account to see whether it aligns with your records and whether you risk falling below minimum balance requirements.
- Review upcoming automatic payments and deposits to make sure they match your records.
- Make sure any unfamiliar debits to the account are legitimate. Contact the bank immediately if you can’t verify a charge.
Different types of checking accounts
If you’re considering opening multiple checking accounts, you’ll have no shortage of choices. You can pick among traditional brick-and-mortar banks, credit unions, online banks and fintechs.
In terms of checking accounts, here are some of the more popular types:
- Traditional checking accounts: These typically offer a debit card and ATM access as well as checks. You’ll usually find physical bank locations, but you may have to pay service fees, so be sure to check.
- Online checking accounts: Online or traditional banks can provide online checking accounts, which means you may or may not have any physical locations for service. But it also means you can bank wherever you are with your phone or tablet.
- Joint checking accounts: Joint checking accounts have more than one account holder who can access the cash and make deposits. This can be a good solution for married couples or college students and their parents. Also, joint accounts are insured up to $250,000 per co-owner, or up to $500,000 total.
- Interest-bearing checking accounts: Some checking accounts let you earn interest, but the rates are usually lower than those for savings accounts.
- Teen or student checking accounts: They might have extra budgeting or safety features, such as transaction text alerts for parents. These accounts typically require a parent or guardian to be a joint account holder.
- Business checking accounts: These accounts provide specific features for business needs, such as tracking expenses, processing payments and managing cash flow. They may include benefits and specialized tools for businesses.
Choosing the right checking account for your needs
As with any type of bank account, you need to weigh different factors when deciding which checking account best fits your needs. A lot depends on how you plan to use the account.
If it’s only for digital transactions, then personal service and bank location aren’t that important. But if you value service, then you’ll want to open a checking account at a bank with a physical branch nearby and a reputation for good customer service.
Another important consideration when choosing a checking account is that it is covered by either Federal Deposit Insurance Corp. (FDIC) or National Credit Union Administration (NCUA) insurance. Beyond that, here are some other guidelines for choosing a checking account.
- If you plan to use an ATM regularly, then you want a bank with a fee-free national ATM network.
- If you’ll be spending a lot of money from the checking account on bills and purchases, then consider an account that offers rewards or other perks. Some checking accounts might offer “extra perks, such as free wire transfers, unlimited transactions or free bill payment options based on individual needs and usage,” Secco said.
- If you plan to keep a minimal amount of money in the checking account, then you’ll want an account that doesn’t charge a monthly maintenance fee for falling below a minimum balance requirement.
- If you want to grow your checking account balance, consider opening an interest-bearing account.
How to open a checking account
Different financial institutions have different rules on how to open a checking account, but the process usually requires the following:
- Valid ID, such as a driver’s license, Social Security card or passport
- Proof of address that shows your name and address, such as a current utility bill or pay stub
- Application that you will fill out either online or at the bank branch
Some banks will require opening deposits. You can typically provide that with a debit card, Automated Clearing House (ACH) transfer or cash.
If you are opening an account online, you’ll have to establish the account by creating a username and password and setting up security preferences.
Frequently asked questions (FAQs)
There are no restrictions on the number of checking accounts you can have at more than one bank. But it’s always a good idea to only open as many checking accounts as you can effectively manage.
You can have as many checking accounts at the same bank as you want if that bank offers multiple accounts. For example, business owners often keep personal and business checking accounts at the same bank.
Some banks limit the number of accounts you can open, but most don’t because consumers will only search for other options.
Not necessarily. Sometimes, having more than one account makes managing finances easier because you can use different accounts for specific purposes. But trying to manage too many accounts at once can make keeping up with your finances difficult.
