Do you feel like overspending and splurging is a huge issue in your life? Maybe you find it hard to focus on multiple financial goals or can’t seem to save up enough or aren’t making as much on interest as you’d like to. In all those situations, having multiple savings accounts can help!
Multiple Savings Accounts Protect Against Overspending
While many consumers think they only need one savings account to keep their finances in check, it can useful to have more to reach certain financial goals. Of course, a good bank account will pay interest and keep the customer’s money as safe as possible. Sometimes, though, experimenting with multiple savings accounts can also save you money and decrease stress, helping you to avoid overspending and maintain your credit. “Having multiple accounts can be a way to keep yourself on task with the specific goals you’re saving for, without the risk of funds getting commingled,” said Greg McBride, Bankrate’s chief financial analyst.
Consider this: a consumer logs into their bank account and sees a ton of money just sitting there. Perhaps they’ve been saving up for a house or trying to pay off a car loan. But when they see that their favorite clothing brand has an incredible sale, they can’t help but use a chunk of it to go and buy a few pieces! The money they have can be moved to a checking account with just a few clicks, making it oh-so-tempting to spend. That’s exactly how multiple savings accounts can benefit a customer who’s confronting bad spending habits: their entire balance will be split into a few accounts, each of which will only be for one financial goal so that the owner knows how much is actually available to spend. If the accounts are also at different banks, the transfer to a checking account might take a day or two, preventing the consumer from easily spending it.
When using multiple accounts that are each designated for a specific financial goal, the owner can also track financial success more easily. Even if the accounts are at different banks, the user can download a budgeting app where they can sync up all their savings accounts. That way, every account is within one app, but the money is still spread out to avoid the temptation of overspending.
Other Useful Benefits of Having Multiple Savings Accounts
Interest rates also matter when you open a savings account. Not all accounts are created equally. In addition to bonuses, each earns an annual percentage yield (APY) based on the interest rate, which corresponds with the growth of the account. Therefore, it’s important to compare savings account proposals from different banks to make sure you get the most out of your interest rate when opening up a new account. For example, some brick-and-mortar banks can get their customers a lower APY for a basic savings account in comparison to the high-yield savings accounts found online while other savings accounts might give the owner higher rates for higher balances.
It’s also important to note that, despite appearing safe, not all bank accounts are protected by the FDIC. There’s a limit of $250,000 per depositor per insured bank and ownership category across all accounts. With larger balances, opening a few savings accounts under different banks is just plain common sense, allowing you to stay under the FDIC coverage limits at each bank! Also, with multiple savings accounts, consumers can feel more secure and powerful by spreading out their finances. If one of the banks fails or becomes less worthwhile, the others will keep your money safe.