Smart banking: How many checking accounts should you have?

How many checking accounts should I have is a common question people ask. Managing various accounts, such as checking and savings, can help optimize your financial management by allowing you to organize funds for different purposes and maximize rewards. Having multiple bank accounts is an effective way to enhance returns on your cash and manage financial risk more efficiently.

While a checking account is a vital part of managing your finances, there’s no standardized recommendation on the matter. Holding different accounts at the same or different financial institutions can offer flexibility, additional benefits, and help you diversify FDIC coverage. Multiple checking accounts may bring better organization for some, while creating challenges for others.

This guide shares what you need to know about having more than one checking account for your personal needs, and highlights the importance of financial management when considering multiple accounts.

How many checking accounts should you have?

There is no one-size-fits-all solution for how many checking accounts you should have. In fact, there is no limitation on how many bank accounts you can have, whether that be checking or savings accounts. Most financial institutions allow individuals to open and maintain multiple checking accounts, but their policies may vary. In theory, you can legally have as many checking accounts as you want, assuming you want to manage the effort of having more than one account.

Americans can have multiple checking accounts, even at the same bank. Not only is there no harm to your credit score in doing this, but having multiple accounts can be helpful. Having access to more than one checking account avails you of certain benefits, such as staying within FDIC coverage limits and increased efficiency. However, it’s important to keep track of each account to avoid confusion, missed payments, or accidental overdrafts.

Ultimately, opening multiple checking accounts can be beneficial in the right situation, but you should consider your ability to keep track of them and understand your bank’s policies before proceeding.

Why one account may be enough for most people

Opting for a single checking account is often the best choice for those seeking simplicity in managing their finances. Maintaining just one checking account helps most people avoid the confusion and stress that can come with juggling two or more accounts, making money management straightforward and less time-consuming.

Thanks to tools like direct deposit and budgeting apps, most people can streamline their checking needs within one account. If you’re searching for an ideal way to manage your finances and have a stable income with predictable bills, one checking account is generally sufficient. Additionally, having a single checking account can help you avoid or minimize monthly fees, as you only need to monitor one account’s fee structure.

That’s not to mention the role of FDIC coverage. The average transaction account balance, which also includes savings accounts, money market accounts, call accounts, and prepaid debit, was $62,500 in 2022, according to the Federal Reserve’s Survey of Consumer Finances. For most, that’s well within the FDIC coverage limit of $250,000 per depositor, per institution.

When a second checking account makes sense

Every personal finance situation is unique, and in some instances, it’s reasonable to have multiple checking accounts. These are some common reasons when it may make sense:

You have irregular income: Do you run a business or freelance on the side? Having a second checking account to manage business expenses and income can simplify managing cash flow.

To manage FDIC coverage limits: FDIC coverage is a limit of $250,000 per depositor, per institution. A person may want a second checking account, not to exceed limits. Just remember that if you have two personal accounts at $250,000 at one institution, only one account is covered.

Shared expenses: Do you and your partner share expenses? Not all couples pool all of their resources together, so having a second, joint account can be helpful.

Personal expenses: A separate checking account can be used to manage personal expenses discreetly, such as gifts or surprises, keeping these transactions private from joint account holders.

Emergency fund: Opening a separate checking account as an emergency fund provides a dedicated place for quick-access savings in case of unexpected events. Having a dedicated emergency account can provide peace of mind by protecting these funds from impulse spending. That said, you’re likely to earn considerably more interest in a high-yield savings account or CD. If you don’t need to use the funds regularly, one of those two options could be better than a second checking account.

Can you have two checking accounts at the same bank?

Yes, it is possible to have two or more checking accounts at the same bank. Banks often allow you to set up additional accounts through your existing relationship. Maintaining multiple accounts at one bank allows you to see all balances in a single online dashboard and perform instant transfers. There’s no legal restriction on it, but some banks may have their respective limits. When opening multiple accounts at the same bank, be sure to consider minimum balance requirements, as failing to meet them could result in fees or other account restrictions.

If you have funds that exceed FDIC protections, it’s wise to open a different account type or consider a second bank to avoid exposing yourself to needless risk.

Why you might need more than one account

Can you have more than one checking account? For many people, this is a common question. There are both advantages and disadvantages to maintaining multiple checking accounts, including having accounts at different banks. While multiple accounts can provide greater financial flexibility and access to diverse features, they also require careful management to avoid confusion, fees, or overdrafts.

Here are some reasons why you may want multiple checking accounts.

Separating bills from daily spending

If you have a lot of transactions hit your account each month, having a second checking account can be advantageous. You can have one primary account that’s responsible for paying bills, so those funds don’t get spent elsewhere, and use another account for everyday expenses like groceries, gas, and dining out.

Automating transfers and bill payments between your accounts can reduce the mental load of managing multiple checking accounts. Setting up account alerts for low balances or large transactions can also help you stay aware of important changes and avoid overdrafts.

Implementing such an approach can simplify budgeting and allow you to focus other funds on goals and discretionary spending.

Joint accounts for couples or families

Not every couple likes to pool their resources. Having a joint account to manage shared expenses like rent and utilities is a good alternative that still allows each person to maintain their respective, individual checking account while also promoting transparency. Separating personal and business finances is important for clarity and organization, especially if one or both partners are self-employed or run a business.

Each person can automate transfers from their individual accounts to the joint account to ensure ample funds to pay shared expenses. Additionally, using a separate account for specific purposes, such as discretionary spending or emergency funds, can help enhance financial discipline.

Business vs. personal finances

Running a business or freelancing commonly requires you to have a business account for tax purposes. Opening a business checking account on top of a personal checking account lets you track income and expenses to help avoid potential IRS headaches. It’s important to keep accurate account information for both business and personal accounts to ensure proper record-keeping and easy access to transaction history.

It’s not uncommon for business accounts to offer features like invoicing or expense tracking. Personal accounts usually don’t offer such capabilities, making a second checking account for your business necessary.

Saving for specific goals

Depending on your personal finances, having a second checking account is a helpful tool for managing and achieving goals. This is particularly so if you’re regularly active in your primary account.

You can open a second checking account for the sole purpose of tracking goal progress and use the other for budgeting purposes. Most banks allow for automated transfers between two such accounts so that you can optimize progress towards your goals. Keep in mind that a high-yield savings account may be a better interest-earning option if you don’t plan on excessively moving funds out of the account.

Compare accounts

Pros and cons of multiple checking accounts

There are pros and cons to having multiple checking accounts. Managing multiple accounts effectively—through automation, clear labeling, and strategic separation for different financial goals—can help you stay organized and track your progress. When juggling several accounts, it’s important to maintain higher minimum balances to avoid fees and simplify account management. Additionally, having multiple accounts can help you prepare for life’s surprises by ensuring you have funds set aside for unexpected expenses. Here’s what to keep in mind.

Benefits: Organization, budgeting, and flexibility

A second checking account is helpful in numerous circumstances, including:

Enhanced FDIC coverage: FDIC protection is $250,000 per depositor, per institution. Opening a second account at a different institution, or a different account type at your bank, increases coverage.

Prevents overspending: Multiple accounts effectively create a mental cash envelope system, giving each dollar a purpose. This can be a simple way to help with budgeting. Having multiple accounts can help with organization and budgeting by allowing you to separate funds for specific purposes.

Possibility of earning perks: Banks often give perks, such as a sign-up bonus or rewards checking. Opening a second account with a different bank or credit union gives that opportunity.

Having a second checking account can provide organization and flexibility, especially for a busy family with converging goals and responsibilities.

Drawbacks: Fees, complexity, and oversight

Having multiple checking accounts isn’t always beneficial. Here’s why you may want to avoid maintaining two accounts simultaneously.

Fees: Bank fees are a common challenge for many Americans. Opening a second checking account can increase the chances of incurring multiple maintenance fees, overdraft fees, or minimum balance fees. Additionally, spreading funds across several accounts raises the risk of overdrawing one or more accounts. Therefore, it’s crucial to monitor all your accounts carefully to avoid costly overdraft charges.

More oversight: Having a second bank account means managing more statements, logins, and passwords. Regularly reviewing bank statements is essential to stay on top of balances, fees, and account activity. One challenge of maintaining multiple checking accounts is the increased complexity of handling additional statements and account details, along with meeting each bank’s specific requirements.

More legwork: Do you use autopay or receive your paycheck via electronic deposit? You may have to contact different vendors to update your banking information.

A second checking account does provide flexibility, but it can easily become too complex to be worth it.

Is it bad to have multiple checking accounts?

No, it’s not inherently bad to use two or more checking accounts. It does require proper organization to manage, though. If not managed wisely, you can easily harm your finances. That’s the last thing you want.

Before opening another account, assess your finances to determine the reasons behind it. You may be better served by using a high-yield savings account to achieve goals. However, if you need to streamline spending or manage an irregular income, having multiple checking accounts can be helpful.

Tips for managing multiple bank accounts

Having two checking accounts immediately doubles the time necessary to manage your finances. However, managing multiple accounts—especially when you have different accounts for specific purposes—can help you stay organized and achieve your financial goals more effectively. Implementing the following tips can simplify your work.

Use budgeting apps to track balances

Thanks to budgeting apps, there’s little need to manage each account separately. Apps like YNAB and Monarch Money let you consolidate accounts into one dashboard, helping you keep track of multiple accounts and view all your account information—such as balances and transaction history—in one place.

Find a platform that works for you and use it to monitor cash flow across multiple banks.

Automate transfers and payments

Linking two checking accounts is a convenient way to streamline your finances. By connecting the accounts, you can effortlessly transfer funds between them to maintain optimal balances. Additionally, setting up automatic transfers with each pay period ensures both accounts are adequately funded to meet your needs. Utilizing multiple accounts can simplify financial management, especially when combined with automated transfers to organize your budget and monitor your spending effectively.

Review accounts regularly for fraud or errors

It’s always wise to regularly review bank accounts to identify potential errors or fraud. Reviewing your bank statements is essential to monitor for mistakes, unauthorized transactions, or suspicious activity. Having multiple checking accounts increases that responsibility. Set aside time weekly or monthly to analyze your accounts to mitigate risk. Setting up account alerts can also help you stay informed about account activity, such as low balances or large transactions, and enhance your security.

Most banks allow you to label accounts. Don’t overlook doing this to avoid confusion and simplify budgeting.

Bottom line

There’s no universal solution to the question, ‘how many checking accounts can I have?’ How many bank accounts you need depends on your income, lifestyle, and financial goals. You may find that having one account works fine, but a second account may provide peace of mind. Having multiple bank accounts can simplify money management, but only if done wisely.