It is common to hold more than one savings bank account. However, not every person is able to manage and utilize the accounts in an efficient manner. Here are some pros and cons of having multiple accounts.
Pros of multiple savings accounts
- More ATM transactions and higher withdrawal limits
Each saving account provides a certain number of free monthly transactions at its Automated Teller Machines (ATMs). When you hold more than one account you are able to enjoy more free transactions. Moreover, ATM withdrawals are subject to daily limits, which increase when you hold more than one account.
- Higher bank transactions
Banks limit free cash deposits, check clearing facilities, withdrawals, and other transactions. If you exceed this limit, the transactions are chargeable. When you have multiple accounts, you are efficiently able to distribute free transactions, thereby reducing the bank charges.
- Debit card offers
Debit cards associated with savings account provide excellent offers such as rewards and cash back. With multiple accounts, you are able to transact online and through Point of Sales (POS) to maximize debit card offers.
- Alternatives in case of non-working
In case a bank’s services are disrupted due to technical breakdown, strikes, or local disturbances, you have an alternative when you hold more than one account.
Cons of multiple savings accounts
- Difficulty in tracking
You will need to track multiple debit card PINs, checkbooks, online banking usernames and passwords, and minimum monthly requirements. As a result, you may find it difficult to keep track, especially if you are not financially disciplined.
- Lower returns
Most banks have a ’Minimum Account Balance’ (MAB) requirement. If the MAB is not maintained, you may have to pay steep fees for non-maintenance. Therefore, you will need to hold more funds to meet the MAB requirements. However, the returns on saving bank accounts are lower when compared to other financial instruments such as mutual funds.
There are several more pros of holding multiple accounts compared to its disadvantages. More accounts mean greater versatility, a higher number of beneficial offers, and improved cash management. Moreover, you are able to develop a regular saving habit by reducing the bank charges and fees.
However, you must consider the number and frequency of your total transactions before you decide to open more than one saving bank accounts. If you have only one or two weekly transactions, maintaining a single account is adequate. It is important that you close any account that you do not use or accounts that do not provide beneficial features. Most importantly, research different banks to find an account that suits your requirements and provides a higher rate of interest.