How many savings accounts should I have?

The number of savings accounts you should have depends on your individual needs and financial situation. You can have multiple savings accounts — usually as many as you want — but it's a good idea to only have as many as you can easily manage. If you have multiple savings goals, a different account for each can help you keep your funds separate and track your progress. Different types of savings accounts can also allow you to grow your money in different ways. On the other hand, a single savings account can still work well for multiple savings goals.

If you're wondering, "How many savings accounts should I have?" here's what to consider before you open multiple savings accounts.

Is it a good idea to have multiple savings accounts?

Having multiple savings accounts may be a good idea in certain situations. If your savings account balance is over the $250,000 limit for FDIC insurance, you might want to open another account to protect your money.

Maintaining multiple accounts can also enable you to take advantage of different types of accounts — such as traditional savings accounts, money market accounts and CD accounts — and various account features and offers, like higher interest rates or unique savings tools.

Is it OK to just have one savings account?

Yes, having just one savings account works well for many savers. Managing more than one savings account can complicate your overall money management strategy.

Fortunately, you can simplify and work toward multiple goals within one savings account by using financial tools to divide your goals into buckets. Separating your savings in one account helps you stay organized, set clear intentions for your money and track your progress toward each goal without confusion.

Citizens Savings Tracker®¹ lets you set up all your savings goals within one account. You determine what percentage of your savings goes toward each goal, and your deposits automatically distribute into each bucket. For example, you can allocate 50% of your savings to your emergency fund, 25% to your vacation fund and 25% to your home renovation fund.

By giving each goal its own dedicated bucket, whether it's an emergency fund, a future home down payment or a college fund, you always know exactly how close you are to reaching each milestone. This separation can also reduce the temptation to dip into funds meant for something else.

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.

Pros

• Stay organized: Having multiple savings accounts may allow you to better organize your finances. You can have different accounts for your short- and long-term savings goals.
• Keep 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.
• Easier budgeting: Having separate accounts for different budget categories may make it easier to stick to a budget.

Cons

• Interest rate variability: Different types of savings accounts may have different interest rates, which can affect how fast your savings grow.
• Potentially complex management: The more savings accounts you have, the harder it can be to keep up with them. Only open the number of accounts that you can easily manage.
• Minimum balance requirements: If an account balance falls below the required minimum, you may incur a maintenance fee.

How to determine how many savings accounts you need

How many savings accounts can you have? Consider the following to figure out the number that's best for you:

• Your personal goals: If you have several different goals, multiple savings accounts can help you manage and visualize each goal independently. Pick your largest goals and open a savings account for each.
• Shared goals: If you're working toward saving for a shared expense with a spouse or partner, two savings accounts can make managing your money easier. Keeping your shared savings account separate from your individual savings account prevents confusion about how much money you've saved for your shared goal.
• Savings timeline: The number and type of savings accounts you choose depends on your short-term, midterm and long-term savings goals. Look at each to determine the most efficient and effective way to grow your money based on how quickly you need to save for each one.
• Your emergency fund: If you have the means to save beyond your emergency fund, prevent accidental spending of living expenses by opening one account for your emergency savings fund and at least one other for upcoming, but non-essential, expenses.
• Minimum balance requirements: Some savings accounts come with minimum balance requirements, which means you can only open as many accounts as you have the funds for. Determine the types of savings accounts you’re interested in and compare balance requirements with your current financial situation.

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 goals and needs.

Traditional savings account

Traditional savings accounts tend to have variable interest rates and low minimum balance requirements. You can also withdraw money easily. A traditional savings account is a good choice for an emergency fund or for an expense coming up in the near future, like a vacation.

High-yield savings account

High-yield savings accounts generally have higher interest rates than traditional saving accounts but also may have higher minimum balance requirements. It could be a good fit for your short-term savings goals, such as saving for a car, if you open the account with a larger balance and intend to maintain the minimum balance.

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 and potential monthly fees if you drop below the minimum. However, money market accounts often come with checks and a debit card for easy access to your money. A money market account can be a good fit for medium-term goals where you want to earn a bit more interest without losing liquidity, such as saving for a wedding or a car.

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. Depending on the term of the CD, this type of savings account is best for longer term savings goals, like college, where you won't need access to your money during the entire CD term.

Individual retirement account savings

Traditional and Roth individual retirement accounts (IRAs) are ideal for long-term savings that you don't intend to withdraw until retirement. The primary difference between these two types of IRAs is whether you fund your account with pre-tax or after tax dollars.

How to manage multiple savings accounts

Take the following steps to make your overall account management as easy as possible.

1. 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, for example, 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.
2. Automate your deposits.
   Funding your savings accounts with automatic 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. You can also set up automatic transfers from your checking account to your various savings accounts each month.
3. Track your account balances.
   Regularly review your savings account balances so you know if you're on track to meet your goals. A savings tracking app allows you to conveniently check your account balances from your mobile device.

Savings account FAQs

If you still have questions about how many savings accounts you should have, get the answers to frequently asked questions here.

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 instead of different banks 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.

What is the ideal number of savings accounts?

The ideal number of savings accounts for you depends on your specific goals. However, having at least two savings accounts, one for an emergency fund and one for future expenses, can help you keep your emergency expenses safe. You could also choose to have three accounts — one for an emergency fund, one for short-term savings goals and one for long-term savings goals.

Are multiple savings accounts FDIC-insured?

The FDIC insures up to $250,000 per depositor, per ownership category, per institution. Ownership categories include single accounts, joint accounts, trust accounts and others. This means that if you are the sole owner of all your deposit accounts at one bank — checking, savings, money market accounts and CDs combined — you're insured for up to $250,000 total at that institution. If your savings exceed that amount and you hold multiple accounts at the same bank, you may want to open savings accounts at additional banks to ensure all of your money remains fully 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.

Reach your goals faster with multiple savings accounts

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, such as 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.