How many savings accounts should I have?

Wondering, "How many savings accounts should I have?" Tracking and achieving several savings goals can be challenging if you keep your money in one savings account. Having a different account for each goal not only allows you to keep your funds separate and track your progress, but you can also select savings accounts that grow your money differently.

Here's what to consider before you open multiple savings accounts.

How many savings accounts can I have?

You can have as many savings accounts as you want, but it's a good idea to not open more than you can easily manage.

How many savings accounts should I have?

The number of savings accounts you should have depends on your needs. It will be different for each person.

You can use multiple savings accounts to help you track different savings goals. For example, you could have separate savings accounts for a college fund, a down payment on a home and new furniture. Keeping your funds separate can help you closely monitor your progress.

You may also benefit from having different types of savings accounts. Because of its low minimum balance requirements, you could use a regular savings account for a short-term goal, like a vacation. You could use a money market account to earn more interest for a midterm goal, like a wedding. And you could use a certificate of deposit (CD) account to lock in a fixed interest rate for a long-term goal, like buying an investment property.

Pros and cons of having multiple savings accounts

Before you open multiple savings accounts, consider the advantages and drawbacks to make sure it's a good choice for your needs.

Advantages

• Helps you stay organized. Having multiple savings accounts may help you organize your finances. You can have different accounts for your short- and long-term savings goals.
• Keeps your emergency fund separate. Keeping your emergency fund separate from your savings may help you avoid the temptation to use it for non-emergency purposes.
• Makes budgeting easier. Having separate accounts for different budget categories may make it easier to stick to a budget.

Drawbacks

• Interest rate variability. Different types of savings accounts may have different interest rates, which can affect how fast your savings grow. CD accounts usually have higher interest rates than traditional savings accounts.
• Potentially complex management. The more savings accounts you have, the harder it can be to keep up with them. You should only open as many accounts as you can easily manage that allow you to meet your goals.
• Minimum balance requirements. In some situations, maintaining the required minimum balance may be difficult with multiple savings accounts. If an account balance falls below the required minimum, you may incur a maintenance fee.

How to manage multiple savings accounts

Although keeping up with multiple savings accounts isn't difficult, you can take steps to help you manage them.

Decide how to split your savings

To help you decide which types of savings accounts to open, list your financial goals. Then, organize them into short-, mid- and long-term goals.

For each savings goal, decide how much of your monthly income you want to allocate to it. If you want to allocate 10% of your monthly income to your savings, you could allocate 3% to an emergency fund, 3% to your retirement savings, 2% to an account for a new car and 2% to an account for new kitchen appliances.

Grow your savings on autopilot

Funding your savings accounts with automatic direct deposits may help simplify saving. If you're paid through direct deposit, you may be able to direct a certain percentage of your paychecks to your savings accounts, which allows you to grow your savings on autopilot. You can also set up automatic transfers from your checking account to your various savings accounts each month.

Track your account balances

Regularly review your savings account balances so you know if you're on track to meet your goals. You can use a savings tracking app to conveniently check your account balances from your mobile device.

Select the best savings accounts for your needs

Before opening one or more savings accounts, consider the different types to make sure you select the best options for your needs.

• Traditional savings account. Traditional savings accounts tend to have variable interest rates and low minimum balance requirements. You can also withdraw money easily.
• High-yield savings account. Similar to a traditional savings account, high-yield savings accounts have higher interest rates but also may have higher minimum balance requirements.
• Money market account. Money market accounts may earn higher annual percentage yields (APYs) than savings accounts, but you usually have a limited number of monthly withdrawals. They also have higher minimum balance requirements.
• Certificate of deposit. CD accounts typically pay a fixed interest rate in exchange for agreeing to keep your money in the account for a specific term, usually ranging from a few months to several years.
• Individual retirement account savings. Traditional and Roth IRA savings are ideal for long-term retirement savings. The primary difference is whether you fund your account with pre-tax or after-tax dollars.

Savings Account FAQs

Can you open more than one savings account at the same bank?

Banks typically don't have any restrictions on the number of savings accounts you can have. Keeping your accounts with one bank can make it easier to manage your personal finances.

Does it cost extra to have multiple savings accounts?

Most banks don't charge anything to have additional savings accounts. They may charge fees for certain account activities, like falling below the minimum account balance requirement, exceeding the number of allowed withdrawals in a month or withdrawing money early.

Are multiple savings accounts FDIC-insured?

Yes, multiple accounts can be covered with FDIC insurance protection, which is $250,000 per person per account ownership type per institution. Account ownership types are single owner, joint owner, trust owned, etc. That means if you are the sole owner of all of your deposit accounts — checking, savings, money market and CDs — at any one bank, you have a combined total of $250,000 in protection for all of those accounts. So if you have multiple savings accounts at one bank that put you over the $250,000 limit, you may want to consider putting some into savings accounts at other banks so that all of your money is FDIC-protected.

How many bank accounts are too many?

The right number of bank accounts varies for each person and depends on your needs and financial goals. If you're having trouble keeping track of your banking information, reducing the number of bank accounts you have may help you better manage your finances.

Will multiple savings accounts affect my credit score?

Because savings accounts don't extend credit, you won't have a credit check when you open new accounts. This means you can have as many savings accounts as you like without it affecting your credit score.

Organize your savings to help you track your goals

Having multiple savings accounts is a great way to organize your savings and track your progress. You can also select the best types of savings accounts to take advantage of certain account features. You can choose savings accounts that earn the most interest or allow you to make purchases with a debit card.

Opening a new savings account is quick and easy. Start your financial partnership with Citizens today. Learn more about our savings accounts.