If you’ve been thinking about opening another savings account, you might be wondering if it’s the right move and whether it comes with any real benefits. You may already have an account and feel uncertain about why you’d need another one.
But there are situations where having multiple savings accounts can be useful, helping you organise your finances, save for specific goals or even take advantage of better interest rates. Before making the decision, it’s worth exploring how a second account could fit into your financial plan.
What are the benefits of having a second account or more?
Having multiple savings accounts can offer several key benefits, especially when managing different financial goals or enhancing financial discipline. Here’s why it could be a smart move:
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Organise your financial goals
Multiple accounts help you allocate funds for specific purposes. For example, you could have one account for daily expenses, another for an emergency fund, and yet another for long-term goals like buying a house or a vacation. This way, you can monitor your savings progress for each goal without mixing funds.
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Better control over spending
By setting up automatic transfers from your main account to separate savings accounts, you can ensure that savings are set aside before you start spending. This approach helps prevent overspending and encourages disciplined saving.
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Take advantage of different features
Some of the benefits associated with the different banks include the interest that they charge, cashback and lower fees. It is always advantageous to have accounts in different banks so that you can enjoy the best of what the different banks have to offer. For instance, one account could have higher interest rates than the other.
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Risk diversification
If all your money is stored in one bank, you face a higher risk if the bank encounters issues. Spreading your money across multiple banks adds a layer of security, as deposits are insured up to a certain amount by the RBI.
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Easier financial tracking
The use of different accounts for different purposes also helps monitor financial progress. This way, you will be able to track exactly how much money has been saved towards each goal without the complication that arises from having all your money in one account.
When should you consider opening another savings account?
If you have specific financial goals that need you to separate your assets, you should open a new savings account. Consider opening a zero-balance account online for an emergency fund or large expenditures such as a home or automobile. This keeps the savings safe and easy to track. It is also advantageous if a bank offers a higher interest rate, as this can help your funds grow more quickly. Just make sure to review the account’s fees and balance criteria before opening it to verify they meet your needs. Multiple accounts might also enable access to various bank benefits, such as cashback or better rates.
How can you manage two or multiple savings accounts?
- First, assign each account for a particular purpose, such as daily expenses, emergency funds, child education accounts, and so on. This way, you will be able to track progress and also not confuse your savings.
- Then, to check your savings goals, set up direct transfers from your main account to other savings accounts. This means that money is transferred automatically and there is no need to follow the funds manually or to remember to transfer them. Monitor each account’s balance and make sure that you do not fall below the minimum balance, otherwise, you would need to pay fees.
- Use banking apps or online tools to stay on top of your balances and interest earnings. Consider consolidating accounts if managing multiple accounts becomes overwhelming, and ensure each account continues to meet your needs, like offering a competitive interest rate or useful features such as free withdrawals or cashback offers.
- Review the benefits each account offers periodically. Some accounts might offer higher interest rates or better perks, so it’s worth shifting your money to accounts that provide the most value. This will help you optimise your savings strategy.
Wrapping up
Savings accounts may be of varying types, and you may open accounts at the same or in different banks as per your requirements. However, that flexibility does not extend to zero-balance accounts since most banks allow customers to open only one. Therefore, it is crucial to analyse the available choices and make the right decision regarding the accounts to be used and how they should be managed.