Is it worth getting more than one bank account?

What are the benefits of having multiple bank accounts? How many bank accounts can you have? And what should you consider before opening an additional account? We take a look.

What are the benefits of having multiple bank accounts? How many bank accounts can you have? And what should you consider before opening an additional account? We take a look.

Anelda Knoesen
From the Money team
6
minute read
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Posted 13 JULY 2021

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. While it may take a bit of extra legwork to keep track of multiple accounts, it does have its benefits too.

You might already have more than one bank account. A lot of people use a current account for everyday banking, then transfer any extra into their savings account for a rainy day or to save up for something special.

There are plenty of other reasons you might want to open additional bank accounts. Maybe you want to open a joint bank account with your partner, so you can pool money together for bills and household expenses. If you run your own business, you might want to keep track of those finances in a separate business account. Or you might want to take advantage of the perks of a particular account, for example free foreign transactions.

What are the benefits of having multiple bank accounts?

There are loads of great reasons to have more than one bank account. Let’s look at a few:

  • No more arguments with your partner over who’s paying the bills. Set up a joint account with your partner and transfer in an agreed amount each month to cover household expenses, making bill paying fair and up front. Why not agree to add a bit extra each month for shared treats?
  • You can work towards different savings goals. Say you’re saving up for the deposit on a new home, but also want to save for a holiday each year and keep money aside for unexpected expenses like your boiler breaking down. You can open three separate savings accounts and use direct debits to set aside a portion of your monthly income for each.
  • You could earn more interest. With savings rates being so low, you could transfer some of your savings to a current account or packaged account and take advantage of attractive rates and extra perks. Some higher-rate savings accounts are only open to current account holders, so you might want to open a new current account with a particular provider to take advantage of a deal.
  • You can keep tabs on different income streams. If you have more than one job or receive income from letting a property, you might find it useful to keep your earnings in separate accounts, particularly when it’s time to square it away with HMRC.
  • You can keep track of your spending. Some people find it useful to set up different bank accounts for different types of spending, to help with budgeting. For example, you might have one account for your rent or mortgage payments and other regular bills, another for your everyday spending on things like food and petrol, and one account that goes towards special treats and days out.
  • You can keep your business income and expenses separate. If you own your own business, it can be a good idea to open a business account to keep your company income and spending separate from your personal current account. It will make it easier to work out how much tax you owe and to keep track of how your business is performing.
  • You can access your money if there’s a tech failure at your bank of if your card gets stopped for suspected fraud. It’s always useful to have a back-up in case there’s a problem with your card or digital banking. And 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.
  • You can make sure your savings are protected under the Financial Services Compensation Scheme (FSCS). The FSCS is there to protect your money if the financial firm you bank with fails. If you have more than the £85,000 compensation limit stored away in one account, you should open a new savings account and spread the money out.
  • You can make the most of perks and rewards. If you have a decent income coming into your current account each month, you could consider opening a packaged account as well to reap the rewards. Packaged accounts often include things like travel and gadget insurance, and offer special savings rates for customers that pay a monthly fee or deposit a certain amount each month. Find out more about packaged bank accounts.
  • You can set up foreign currency accounts to use abroad, without paying all the normal fees. This is especially useful if you have a home or family overseas, or your job often takes you abroad. Instead of frequent trips to the Bureau de Change or paying exorbitant fees for foreign transactions, you could open a foreign currency account that lets you transfer money from your current account without the usual fees.
  • You can try out 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, like out of hours banking and free ATM withdrawals abroad. Some, like the popular Monzo and Starling, are purely app-based and offer tools that help you track your spending, split bills with other users and create different savings and spending pots for easier budgeting.

What do I need to be aware of when opening multiple bank accounts?

Some banks have requirements for opening a new current account. They might want you to have your salary paid into that account or ask you to set up a certain number of Direct Debits to come out each month. 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.

There’s no point in opening a bank account you can’t use or don’t need. Especially if it’s going to leave you stretched or paying account fees you can’t afford. And bear in mind that applying for multiple accounts within a short period of time could have a negative impact on your credit score.

Take a good look at your personal finances before you rush into opening a new account. Opening a joint account with a partner you trust can be a great way of managing household finances fairly and might be a no-brainer, but opening a packaged account to get a certain reward will backfire if you can’t afford the monthly fee.

How can I manage multiple bank accounts?

One of the potential pitfalls of having multiple accounts is losing track of your money. You’ll need to be extra organised to keep track of your finances if you’ve spread money across several accounts, but there are plenty of tools you can use to help you manage your finances.

Consider setting up standing orders to make sure your money gets to the right account without you having to do anything. For example, you could have your income coming into one current account, then set up standing orders to your joint account for household expenses and to your savings account.

When it comes to effectively managing your finances, we can help you see all your transactions – payments coming in and going out – all in one place with our free ‘Your bills’ service in the Meerkat app. You can see how much your bills are costing you and check if you need to move money around to stop going overdrawn, if necessary. If you have more than one account, it’s a great way of getting oversight of your financial situation. Not only that, it can help alert you to better deals on your bills that you might otherwise miss out on.

Frequently asked questions

How is opening an additional account different to switching accounts?

When you switch bank accounts, your old bank account will be closed. Your balance will be transferred over to your new bank automatically, along with any payments or direct debits you make from that account.

Opening a new account in addition to your existing current account means your old bank account will still run as normal. If you want to transfer any of your balance or change where your payments are coming from, you’ll have to do that yourself.

Find out more about switching bank accounts.

What are jam jar accounts?

Jam jar accounts are designed to let you put money into different ‘containers’ within the same account. That means you can split your money into, say, household expenses, everyday spending, and leisure and entertainment. Just like if you had real jam jars or piggy banks at home that you were using to save money for different purposes. Some credit unions offer this type of account but they’re usually not great value, as they often charge monthly fees or charge for ATM withdrawals.

As an alternative to traditional jam jar accounts, you could open separate fee-free current accounts and split your money between them. You could also look at app-based banks like Monzo that let you split your money into different spending pots.

Is there a limit to how many bank accounts I can open?

No, technically you can open as many bank accounts as you want, providing you meet the bank’s requirements. But there’s no point in opening a bank account you don’t need. Have a careful think about how you can use multiple bank accounts to better manage your own personal finances before you rush into a decision.

When you know what you need, we can help. We can compare different types of account so you can see what’s out there and make an informed decision.

Compare current accounts.

Should I open multiple bank accounts with the same bank?

For ease, you might want to open multiple accounts with the same bank, for example a current account and one with a savings rate. You should check what else is out there first, though, to make sure you’re getting the best deal.

Compare savings accounts.

Remember, to make sure your savings are fully protected you’ll need to keep under the FSCS compensation limit of £85,000 per financial institution. And bear in mind that some banks might be operating under the same licence even though they are, on the face of it, separate firms.

Read our guide to keeping your savings safe.

And consider that if there’s a glitch with the bank’s computer system, if your money is all with the same bank it may mean you might not be able to access it.

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