A savings account is a great option to park your additional funds. It offers a safe and assured return on your money while giving you the flexibility and liquidity to withdraw that money as per your needs and requirements. Having said that, should you have multiple savings accounts with multiple banks? Or, should you just maintain one and be done with it? The answer is not that simple.
Here are some pros and cons of having multiple savings accounts that you should be aware of.
Pro#1: Separate accounts for separate financial goals
We all have different financial goals and aspirations. Whether it is saving money for a wedding, holidays, education funds, or emergency funds, savings accounts are a great option for all these. Having a separate account for all these different aspirations will let you manage them better. You will be able to plan for all these financial goals separately, making sure that you don’t fall short of meeting them.
Pro#2: Avail different offers and benefits provided by different banks
Although the core idea behind a savings account remains the same, the offers and benefits provided by different banks on their savings account can differ. Even the interest rate that you can earn on your savings account will differ. Having many different savings accounts will allow you to reap benefits of all these different offers.
Pro#3: Sense of security
The general rule of investing is that ‘never put all your eggs in one basket’. Having one account to keep all of your hard-earned savings does put you at some risk. If your bank starts facing some financial troubles, you could end up seeing your savings getting blocked for some time or you could even end up losing money. The government of India insures deposits put in bank accounts up to a maximum limit of Rs. 5 lakhs and any amount greater than that is not insured. So, having multiple savings accounts will give you that security of not having your entire savings parked in just one place.
Con#1: Managing many accounts is tough
This one is a no-brainer. The more accounts you have, the more difficult it will be to keep track of the money in all those accounts. Having to remember multiple passwords, multiple PINs, having multiple bank apps in your mobile phone, etc. are a pain that you may not be willing to deal with in your life.
Con#2: Maintaining minimum balance requirements
A savings account comes with minimum average balance requirements. If you fail to maintain that minimum balance, you may be charged penalties. With just one savings account, you have to worry about maintaining that minimum balance in just that one account. As you start having multiple accounts, the minimum balance requirements increase proportionately. This ends up blocking more and more of your money that you can’t go out and spend.
So having multiple savings accounts has its advantages and disadvantages. Make sure to consider both before choosing to open multiple accounts based on your specific preferences and needs. Click here to open a savings account online.