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How many bank accounts should you have?

How many bank accounts should you have?

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Money is necessary for our day-to-day requirements. Most people keep money in banks except for some underprivileged sections of society who don’t make enough money and it becomes impractical to keep money in banks as they need the small amount of money that they earn for their daily survival. There are other people who earn enough money and have many bank accounts to take care of their needs. They may have multiple bank accounts, but how many bank accounts should a person have?

There are various reasons a person may have for opening multiple accounts. Sometimes people switch jobs and their employer may have a preferred bank account. The person may have separate accounts for their investments, joint family account, or carrying out their business. They may find that the terms of one bank for a particular financial product are more suitable than the others and which may be for lockers, credit cards, or fixed deposits. Besides this, there would be other privileges like rewards and discounts on making utility payments, shopping, etc. which may help them to make savings while spending.

But they should think out and compare all the benefits, as maintaining too many accounts may be a burden rather than being cost-beneficial. People should understand that when they have so many bank accounts they have to lock in more money as there is a minimum balance requirement in the banks and if the minimum requirement is Rs 5000 and you have 6 accounts you would have to put aside Rs. 30,000. In case your bank account is inactive for more than two years it is considered dormant and you may not be able to perform any transaction without reactivating the account.

For the person who has many accounts, it becomes difficult to keep track of debit cards, checkbooks, net banking user ids, and passwords. Besides this, there are annual card charges. So many accounts are not needed and holding accounts should depend on the frequency and volume of transactions. The transactions can become confusing if you have different accounts linked to different transfers and payments. Even the filing of tax returns can be cumbersome with so much data and details.

The lesser the number of accounts the better it is. You can go up to three accounts; the first one can be your salary account, the second a joint account with your spouse or parents where the family can access the account in case of any emergency, and the third one a permanent account. The salary account can change every time you change the job. The permanent account can be made your main operating account and it should be linked to EPF, PPF, mutual funds, Demat account, monthly bill payments, and income tax payments. When you have a maximum of three bank accounts you can easily keep track of the minimum balance requirement of each bank so that you don’t have to pay a penalty.

It is better to ensure that you know all the facilities that a bank provides before opening an account. It may be the debit/credit card requirement, locker facility or the cash withdrawal limit at the ATM. Compare the different bank accounts and try to find the bank account that provides you with the maximum facilities with low charges and a lower minimum balance requirement. Besides this someday you will require a big loan in life like a car loan or a home loan. Do the study in advance so that it becomes convenient to open an account with a bank that offers the maximum loan at a minimum rate.

It is better to have a maximum of 2-3 bank accounts and not more so that you will be easily able to track and maintain the accounts. Having too many bank accounts does not help much. Do the cost and benefit analysis and select the best bank for your transactions.

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