Can You Ever Have Too Many Bank Accounts?

Opening a new bank account has never been simpler, with online and mobile applications putting it at your fingertips. The ease of opening new accounts, coupled with generous bank offers and higher APYs, might make you wonder how many accounts you should reasonably maintain. After all, when you open a new account, you disclose sensitive information, like your Social Security number. At what point are you spreading yourself too thin by having accounts at multiple institutions?

Truth is, having multiple bank accounts could either distribute risk or increase it, depending on how well you can manage your accounts simultaneously. If you're thinking about maintaining multiple accounts, let's take a look at how you can do it prudently.

The pros of having multiple bank accounts

Having multiple bank accounts can help you manage your finances, capture great interest rates, increase accessibility to your funds, and help you separate financial goals. At the very least, splitting your finances into a savings and checking account will earmark your money from the start for either monthly spending or ongoing savings. This gives your money purpose and could prevent you from digging into your savings at a time when you don't need to use it.

Of course, when we talk about multiple bank accounts, we're often referring to having similar accounts at different banks, such as two or three high-yield savings accounts. This, too, can help you manage your money, especially if you give each account a purpose. For example, my household uses one savings account for our emergency fund, another savings account for traveling, and a third savings account as a collect-all for other purchases (like surfboards or online classes).

Our Picks for the Best High-Yield Savings Accounts of 2024

SoFi Checking and Savings APY up to 4.60% Rate info You can earn the maximum APY by having Direct Deposit (no minimum amount required) or by making $5,000 or more in Qualifying Deposits every 30 days. See SoFi Checking and Savings rate sheet at: https://www.sofi.com/legal/banking-rate-sheet. Min. to earn $0 Open Account for SoFi Checking and Savings Member FDIC.	APY up to 4.60% Rate info You can earn the maximum APY by having Direct Deposit (no minimum amount required) or by making $5,000 or more in Qualifying Deposits every 30 days. See SoFi Checking and Savings rate sheet at: https://www.sofi.com/legal/banking-rate-sheet.	Min. to earn $0
Citizens Access® Savings APY 4.50% Min. to earn $0.01 Open Account for Citizens Access® Savings Member FDIC.	APY 4.50%	Min. to earn $0.01
American Express® High Yield Savings APY 4.25% Rate info 4.25% annual percentage yield as of June 1, 2024 Min. to earn $1 Open Account for American Express® High Yield Savings Member FDIC.	APY 4.25% Rate info 4.25% annual percentage yield as of June 1, 2024	Min. to earn $1

We could keep these accounts at one bank. Some banks, in fact, let you open multiple savings accounts for free and designate them with whatever purpose you want. But we don't do this because we want different features for each account, features that not one bank offers all at once. For example, our emergency fund is at a big national bank with lots of ATMs, which gives us peace of mind knowing we can withdraw money whenever we need it. Our travel fund is in an online savings account with a 5.25% APY, while the third is also an online savings account, but at an institution that gave us a welcome bonus for opening it.

Another advantage to having multiple accounts is to increase your FDIC or NCUA insurance. These two agencies will insure up to $250,000 per depositor, per eligible account. If you have, say, $500,000, dividing it evenly across two accounts would guarantee the full amount of your savings is returned to you should both banks fail.

The cons of having multiple bank accounts

The hardest part of having multiple accounts is keeping track of them. This is especially true if you have two or more accounts at different financial institutions. While banking apps make it easy to check your accounts on your phone, it's not always feasible to check accounts daily. This difficulty is compounded if you don't save log-in credentials automatically, as you'll have to remember different usernames and corresponding passwords for each account.

Another downside is increased risk of fraud. By spreading your money across multiple institutions, you could increase the chance of a compromised account. Though it's rare, it's certainly not to be taken lightly. Additionally, if these accounts have monthly service fees, you might be better off consolidating into one to reduce the cost or meet requirements to waive the fee.

If you do end up choosing to open multiple accounts, a budgeting app could help you manage them all efficiently. Many budgeting apps let you consolidate bank accounts into one central hub, allowing you to monitor transactions, avoid overdrafts, and stay on top of suspicious activity. Check out our list of best budgeting apps, or choose a bank that lets you link external accounts to its mobile app, like U.S. Bank.

On the whole, having multiple bank accounts can help you combine the best features of different accounts, while also covering more of your savings with FDIC or NCUA insurance. The downside is that having too many accounts at once could lead to mismanagement or open you up to a compromise of sensitive information. It's not a bad idea to have more than one bank account, just be sure you manage them together and don't neglect one for a long period.