4 reasons to have multiple savings accounts

Having multiple accounts — at the same bank or different banks — can be useful for managing different savings goals, and there’s little harm in doing so, since it doesn’t impact your credit.

Most Americans keep all their savings in one account earning barely any interest, missing out on hundreds or even thousands of dollars annually. Here’s why opening a second (or third) savings account could be one of the smartest financial moves you make this year.4 reasons to have multiple savings accounts1. Stop leaving money on the table with low interest rates

If you’re keeping all your money at a traditional bank earning next to nothing, you’re missing out. The national average savings rate sits at just 0.61%, but high-yield savings accounts are currently offering rates around 4% APY. That’s nearly seven times more interest on your hard-earned savings.

Let’s put that in perspective: On a $10,000 balance, the difference between 0.50% and 4% is $350 per year. That’s real money you’re leaving on the table by sticking with a single low-rate account.

Keep a checking account at your local bank for convenience, then move your actual savings to a high-yield account. You get the best of both worlds: Access to branches when you need them, and competitive returns on the money you’re actually saving.2. Keep your hands off money earmarked for specific goals

Having separate accounts for different goals isn’t just good organization — it’s a behavioral trick that works. When your emergency fund, vacation savings, and house down payment all sit in one account, it’s too easy to blur the lines.

Some banks make this even easier. Ally Bank, for example, lets you create multiple “buckets” within a single savings account, each earning the same high rate. But even if your bank doesn’t offer that feature, opening separate accounts — even at different banks — creates a clear mental separation that helps you stay on track.3. Protect all your savings with FDIC insurance

If you have more than $250,000 in savings, you need to pay attention to FDIC insurance limits. The FDIC only insures up to $250,000 per depositor, per account type, per institution. Anything above that? Not protected if your bank fails.

The fix: Spread your money across multiple banks. Each bank provides its own $250,000 of coverage, so opening accounts at 2-3 different institutions ensures all your money stays protected.

Bank failures do happen, and when they do, having your savings properly insured means the difference between getting your money back immediately or facing a lengthy claims process.4. Take advantage of sign-up bonuses and unique features

Banks compete for your business with sign-up bonuses, cash back programs, and unique features. Opening multiple accounts lets you cherry-pick the best offers without putting all your eggs in one basket.

One bank might offer a $200 bonus for new accounts, while another provides better ATM access or stronger mobile banking tools. By strategically opening 2-3 accounts, you can maximize these perks while still earning competitive rates on your savings.What to watch for before opening multiple accounts

It’s important to do your research before opening a new account. These are some things to consider.

•Minimum balance requirements: An attractive yield for a savings account might have a catch: a minimum balance requirement to get that yield. If your savings are split between multiple accounts, it could be harder to meet that minimum.

•Monthly fees: Watch out for any bank fees that apply to your savings accounts, including the most common: a monthly service fee. You may be able to waive the fee by meeting certain requirements, like having a certain amount on deposit. But just be sure you can meet the requirements to avoid paying fees.

•Transaction limits: Another fee to consider is an excess transaction fee. Some banks limit withdrawals from savings accounts to six per month, and there could be a fee if you exceed that limit. That’s a potential risk of having multiple savings accounts, since you may find yourself transferring money frequently between them. And even if a bank doesn’t charge a fee for going over the withdrawal limit, your savings account could be converted to a checking account if you frequently go above the withdrawal limit.How to manage multiple savings accounts

Managing multiple accounts requires some work to make sure you’re staying on top of each account’s balance, fees and earnings.

One way to simplify managing accounts is to focus on fee-free accounts, which saves you the stress of having to remember each account’s monthly fees or minimum balance requirements. A spreadsheet is a useful tool for organizing all of your accounts’ information. Whenever you open a new account, add it to the spreadsheet so you have a single place where you can keep an eye on all your financial accounts.

There are also numerous personal finance apps that can help you track and build your savings. Your own bank’s app might even allow you to link external accounts so you can track all of your finances in one place.Frequently asked questions

• How do you build your savings? Building your savings involves setting clear financial goals, creating a budget that includes regular savings contributions, and sticking to your plan. It can also be helpful to automate your savings contributions and to put any extra money — like bonuses, tax refunds, or raises — directly into savings. If you have multiple savings accounts, you might choose to dedicate each one to a different goal, which can make it easier to track your progress.

• Does having multiple savings accounts affect your credit score? No, having multiple savings accounts doesn’t directly affect your credit score. Savings accounts aren’t reported to credit bureaus and don’t appear on your credit report. However, certain activities related to savings accounts could impact your credit. For example, if a bank performs a hard credit check when you apply to open an account, it could temporarily lower your credit score by a few points. Additionally, if your savings account goes into negative balance and you don’t pay the amount owed, the bank could send the account to collections, which would negatively affect your credit.

• Can you open multiple savings accounts at the same bank? Yes, you can open multiple savings accounts at the same bank. Some banks allow customers to open several accounts under the same profile, which can be helpful for organizing money by goals.

• Does closing a savings account affect your credit score? Generally, no; closing a savings account does not affect your credit score. That’s because savings accounts are not credit accounts, so they don’t appear on your credit report and don’t factor into your credit history. However, if the account is linked to unpaid fees, that could eventually impact your score if you are sent to collections.Key takeaways

•Multiple savings accounts let you separate goals and earn more — whether you’re building an emergency fund or saving for a vacation.

•Right now, top high-yield savings accounts earn around 4% APY — significantly more than the national average.

•Split your savings across banks to maximize FDIC insurance coverage if you have more than $250,000.

•Watch out for monthly fees and minimum balance requirements that can eat into your earnings.