A question we always ask. Having numerous bank accounts has its advantages, but for individuals who aren’t financially responsible, keeping track of various checkbooks, debit cards, online banking user IDs and passwords, and certain average monthly amounts may be a hassle.
People may now create savings accounts from the comfort of their own homes thanks to digital banking. In only a few minutes, a person can apply online and start an account. People have been able to open many savings accounts in different banks because of the convenience of use.
Below are a few advantages of multiple Multiple Bank Accounts:
Advantages and Benefits
Various banks provide amenities such as several lockers, insurance, premium debit cards, and other perks. Account-holders also receive points and discounts on utility bills and shopping. As a result, having multiple accounts can help you save more money while spending less.
Since banks limit the number of free ATM withdrawals each month, having multiple accounts lets you transact from a variety of ATMs while avoiding fees. This is especially useful for frequent ATM users.
Accounts with specified goals
Sometimes people put money into multiple savings accounts to save for things like trips abroad, vehicle purchases, and higher education. Some families form joint accounts solely for daily costs. Many people also retain a separate account for emergency purposes.
Partner Benefits in Banking
Most online and e-commerce portals have partnered with a bank and provide their clients with exclusive promotions and offers. One can take advantage of a greater range of such deals if they have various bank accounts.
The Deposit Insurance and Credit Guarantee Corporation insures deposits. When a bank fails to pay the account of customers, the corporation steps in to compensate for their losses. If the amount surpasses the desired or safe limit, putting all funds in one bank can be problematic. By separating the money and depositing them in multiple banks, each will be insured separately. These accounts can be used as a backup in the event that the bank where one’s primary account fails.
Unfortunately, there are several drawbacks to having many Bank Accounts:
Requirement for AMB
Bank customers must maintain a monthly average amount in every one of their accounts, or they will be charged. While managing many accounts, it’s easy to forget about the AMB.
Amount of Interest Lost
On savings accounts, not all banks offer the same interest rate. When compared to keeping all funds in a single savings account, depositing money in many bank accounts can result in a loss of interest. Many banks offer greater interest rates if you deposit more than a specific amount. If money is put in numerous accounts and the threshold is not met, the interest will be lost.
Charges & Fees
Annual fees and charges, such as ATM fees, locker fees, and maintenance costs, are common in savings accounts. Paying all of these fees and charges can eat into your overall interest earnings.
Tracking is a problem.
Keeping track of several cheque books, debit cards, net banking user IDs and passwords, and AMB might be difficult for those who are not financially responsible.
The frequency and pattern of transactions, volume, and emergency needs should all be considered while deciding whether to keep numerous savings accounts. If financial activities are limited to one or two per week, multiple accounts may not be required. To save fees such as yearly card charges and the potential cost of maintaining AMB, it may be beneficial to terminate dormant savings accounts or those with poor features.
A supplementary savings account (Bank account) should only be opened if it meets one’s needs and pays a greater rate of interest.