Should you have two or more savings accounts in the same bank?

The initial phase of your financial journey frequently involves establishing a savings account, which serves as a repository for your earnings and provides you with a debit card for convenient access to your funds at any time and from any location. It is common for individuals to maintain a single account at one financial institution. However, many choose to open multiple savings accounts to meet their specific needs.

A prevalent inquiry among customers is whether it is advisable or advantageous to have two savings accounts within the same bank. This discussion will explore the intricacies of managing multiple savings accounts, including the associated benefits and drawbacks, as well as important factors to consider for those thinking about this approach.

Multiple Savings Accounts

You can maintain more than one savings account with the same bank. Many banks do not impose restrictions on the number of savings accounts a customer can hold. This flexibility allows individuals to open multiple accounts for various purposes, such as budgeting, saving for specific goals, or managing different streams of income.

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Benefits of Holding Two Savings Accounts

1. Financial Management

Separation of Funds: Having multiple accounts can help in segmenting your finances. For instance, one account can be used for day-to-day expenses, while another can be designated for saving towards specific goals like a vacation or an emergency fund.

Example: You might use Account A for monthly expenses and Account B for saving Rs 5,000 each month towards a down payment for a house.

2. Interest Rates

Different Schemes: Banks often offer various types of savings accounts with different interest rates and benefits. By holding two accounts, you can take advantage of different schemes that offer higher interest rates or additional features.

Example: Account A might offer a standard interest rate of 3.5%, while Account B, a high-interest savings account, might offer 4%.

3. Security

Backup Plan: In the event of an issue with one account, such as a technical problem or a bank error, having a secondary account ensures you have continued access to your funds.

Example: If there is a problem accessing Account A, you can still use Account B to manage your finances.

Drawbacks of Holding Multiple Accounts

1. Complexity

Tracking Multiple Accounts: Managing multiple accounts can become cumbersome. Keeping track of balances, transactions, and account statements may require additional effort. For example, monitoring two accounts means keeping an eye on two sets of statements and ensuring no errors or discrepancies in either account.

2. Additional Fees and Charges

Adhil Shetty, CEO of Bankbazaar.com says, “Banks may charge maintenance fees if the minimum balance requirement is not met. Maintaining multiple accounts could lead to higher fees if the minimum balance criteria are not consistently met across all accounts. For example, if each account requires a minimum balance of Rs 10,000, failing to maintain this balance might result in monthly maintenance charges.”

Key Considerations for Consumers

1. Terms and Conditions

Ensure you are aware of the terms and conditions associated with each account, including any fees or penalties for not maintaining a minimum balance. For example, check if Account A has fees for falling below a minimum balance and compare these with Account B’s terms.

2. Convenience vs. Disadvantages

Weigh the benefits of having multiple accounts against the added complexity of managing them. Consider if the advantages outweigh the potential hassle. For example, if the additional account helps you save effectively and track your finances better, it may be worth the extra effort.

Maintaining two savings accounts in the same bank offers some benefits. However, it also comes with potential drawbacks. Therefore, before opening multiple accounts, consider your financial goals, costs and whether the benefits align with your needs. Once your assessment shows that you can manage two accounts and they serve your financial purpose, there is no harm in going ahead.