Is it worth getting more than one bank account?
Is it worth getting more than one bank account?
Are there good reasons why it could be worth having more than one bank account? And how many bank accounts can you have? We take a look.
How many bank accounts can you have?
You can have as many bank accounts as you like, from banks that are willing to let you open one. And having more than one bank account can be worth it for some people.
Be aware, though, that opening an additional bank account isn’t the same as switching bank accounts. If you switch to a new bank account, your old account will be closed.
We take a look at situations where it might be useful to have more than one current account.
To have a separate joint household account
Having a joint account for household bills and expenses, which you both pay an agreed amount into, as well as a personal current account each, can offer you both an easy way to pay bills and the privacy of your own account. Joint accounts can also be useful for housemates that you trust.
To earn more interest
With savings rates being so low, some current accounts and packaged accounts offer attractive rates on balances up to a set amount. Some current accounts offer higher rates than savings accounts, so this option is worth considering for some of your savings.
To keep tabs on different income streams
Some people find it useful, particularly for tax purposes, to keep different earnings in separate accounts.
For example, if you’re an employee doing freelance work on the side, you might want separate accounts for your PAYE and freelance earnings. That way, you can keep track of each income stream and pay for business expenses from the appropriate account. If your side hustle grows, you may even want to set up a business account.
Landlords may find it useful to have rent paid into a separate account, which can also be used for property maintenance and repair payments.
To have access to money if there’s a tech failure
There have been some spectacular systems failures at banks, where customers have been unable to access their money – for days or sometimes weeks. For example, when TSB moved to a new IT system in April 2018, up to 1.9 million customers were locked out of their accounts for several days, while others faced problems for more than a month.
Having two bank accounts offers you the option of getting money from somewhere else if your main bank suffers a technical failure. If this is one of your reasons for opening a second account, make sure you choose a bank in a different group from your main account. Banks in the same group could be using the same systems and experience problems at the same time.
To stay under the £85,000 compensation limit
If you’re lucky enough to have a big chunk of money to put away, you might want to open more than one savings or current account to make sure you stay within the Financial Services Compensation Scheme limit of £85,000. It’s there to protect consumers if financial firms fail, including banks and building societies.
To get access to perks and rewards
Some banks offer their customers special deals or perks with current accounts.
For example, with HSBC Advance you could earn 5% interest on a regular saver account or preferential rates on borrowing. The Santander 1|2|3| account will give you cashback on home and car insurance premiums, and cashback from some household bills too. You can also get cashback on the first £1,000 you pay towards a Santander residential mortgage.
Nationwide’s FlexPlus is £13 a month and for that you’ll get worldwide travel insurance, mobile phone insurance and commission-free cash withdrawals abroad. (Details for all these accounts correct as of August 2019.)
You may want to be clever about having more than one current account to maximise the benefits you can get. But be aware, some of these offers may depend on you paying a certain amount of money into your account each month.
And you should never get a bank account for just the perks, particularly short-term benefits. You need to make sure the account is suitable for you once any deal is over.
To use a foreign currency account
If you have a home or family overseas, or your job often takes you abroad, you may want to consider having a current account that allows you to pay in different currencies. You could opt for a Barclays Euro Account and a Barclays sterling account, with no fees for transferring between them. Other high-street banks offer similar services that are worth comparing.
Generally, banks will want you to have a sterling account with them before they will open a foreign currency account for you. It may help you save exchange fees and avoid potential exchange rate loss.
To try one of the challenger banks
Challenger banks have been taking on traditional banks at their own game, offering different or improved services to attract customers. For example, Metro Bank branches stay open until 8pm, Monday to Friday, and are open on Saturday and Sunday too. This can be very convenient if you can’t get to a branch in normal hours.
Other challenger banks are purely app based. These banks are innovative about the kind of information you can see when you look at your account. With Monzo, for example, you can see how you’re spending your money as well as set budgets for different types of spending, put money aside in different pots to help you budget and put spare change into a savings pot. The account can also split tabs when you’re on a night out or for ongoing bills, so can be useful for couples or housemates.
Starling Bank pays interest on current account balances up to set limits, allows you to set aside money for goals and lock your card if you’ve lost or misplaced it, and even lets you block certain types of transactions.
Starling and Monzo also led the way in introducing a gambling blocker, and high-street banks like Barclays have now followed suit.
If you opt for a second bank account, it’s worth knowing….
Some current accounts may require you to have your salary paid into them. You may also be required to set up a certain number of Direct Debits. Other banks may be happy to open an account for you as long as you pass their credit check and pay in a certain amount of money every month.
Remember, if you have more than one bank account, you can potentially route money between accounts to make sure these requirements are fulfilled. Always make sure you check and understand the conditions for any bank account you open.
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