How Many Savings Accounts Should I Have?

The right number of savings accounts is a personal decision, but in many cases it may be a smart strategy to have more than one. There’s no limit to the number of savings accounts you can have, but the key is to make sure you can manage them all.

Learn why you may want to have as many savings accounts as you have savings goals, and what to consider when shopping for a savings account.

How Many Savings Accounts Should You Have?

Though there’s no specific number of savings accounts you should have, opening more than one is a common strategy, according to Matt Gromada, managing director, head of Youth, Family and Starter Banking at Chase. “Some may find it helpful to have more than one saving account, thus an account for each item or goal,” he said.

Most people have different savings goals, but the amounts they need and the timelines they’ve set for each goal might be different. For example, you may want to save up to buy a new car in two years, while also putting money aside for a vacation in a few months. 

“Just as you might have a coin jar allocated for a road trip, savings accounts can be used similarly,” Gromada said.

Emergency Fund Savings Accounts

Everyone should have a savings account that is kept separate for emergencies that can be a source of funds for any unexpected expenses. An emergency fund can ensure you can pay for a sudden expense like a car repair or medical bill without having to go into debt, which can increase the costs.

Many experts recommend saving at least three month's worth of necessarily living expenses in an emergency fund so you can meet your needs if you lose your income. Having a separate account for an emergency fund will help you avoid using those funds unless they are for unexpected necessary expenses.

Additional Savings Accounts

Depending on your current savings goals, and how many accounts you are comfortable managing, you can open separate savings accounts for goals like:

• A vacation fund
• A home improvement project or major purchase for your home
• A down payment for a car or home
• Back-to-school or holiday shopping
• A wedding, anniversary, or birthday celebration

Where To Open Savings Accounts

You might want to keep all your savings accounts with one bank or with several different banks. Keeping your funds at one bank can make it easier to manage all the accounts from the same app. However, if you have more than $250,000 in savings, you may want to spread out your funds among several banks to ensure they have Federal Deposit Insurance Corp. protection.

Other advantages to having savings accounts across different banks and credit unions can include higher earnings. For example, you might find that another bank is promoting a higher rate for its high yield savings account than your current bank. In addition, you could be eligible for a cash bonus for opening a new account at some institutions.

Pros and Cons of Having Multiple Savings Accounts 

Pros Explained

• Broader FDIC-insurance protection: The FDIC insures each depositor up to $250,000 per bank, per ownership category. If your total savings is above that, you could be putting some of your funds at risk. Instead, with multiple savings accounts, you can move some of the cash into another bank. Alternatively, you could place some of the funds in a joint account (which is considered a different ownership category).
• Staying organized with multiple savings goals: Being able to clearly see individual goals and track progress can help you stay committed and motivated to save.
• Potential bonuses and higher yield offers: If you are proactive about opening new savings accounts when you set a new goal, you can take advantage of the best current offers. Banks and credit unions often offer bonuses or competitive interest rates on savings accounts to attract new customers.

Cons Explained

• More accounts to manage: “While there is no specific number of accounts that is considered too many, it can become increasingly more difficult to keep track, the more you have under your name,” Gromada said.
• Potential minimum balance requirements: If a savings account has a minimum deposit to waive a monthly fee, you’ll need to keep at least that much in the account. 
• Potential lower interest rates: Some accounts require a minimum balance to qualify for higher interest, so if you spread your money throughout multiple accounts, you could earn less.

How To Manage Multiple Savings Accounts 

Be strategic about how you manage multiple savings accounts to get the most out of them. Here are some tips for managing several bank accounts at once:

Use Account Nicknames

“Some banks let you title each account so when you’re looking online, you can easily make sure you’ve got the right account,” said Dawn-Marie Joseph, founder of Estate Planning & Preservation in Williamston, Michigan. So, for example, you can name one “vacation fund” and another “new MacBook Pro."

Seek Out Competitive Interest Rates

If you’re thinking of opening a new savings account, shop around for competitive interest rates with online banks. Or, you can even negotiate with your current bank, Joseph said. “They have the ability to change interest rates on your accounts. The more you have in the account, the more flexibility you have to negotiate the kind of rate that you want.”

Automate Your Savings 

Allocating funds to your various savings buckets can be a time-consuming task every payday, especially if you use different banks. But if you set up specific amounts to transfer automatically, you don’t have to think about it. You can have a specific amount taken out of your checking every single week, or whatever frequency works for you, Joseph said. “It takes thinking about it out of your hands,” she said.

Understand FDIC Limits

You are limited to $250,000 per account holder, per account type at a particular bank. But you can have different account types, and the FDIC will protect your funds up to the $250,000 limit for each account. “If you and your husband have $250,000, you can have another $250,000 with your son, for example,” Joseph said.

Other Tips for Smart Saving 

Prioritize Emergency Savings

First and foremost, you’ll want the highest percentage of your savings to go toward your emergency fund. Ideally, you want to contribute on a regular basis until it grows to a level that can cover several months of household expenses. That said, if you’re just starting out, set incremental goals, such as “save $1,000 by the end of the year.” 

Create a Savings Rule for Extra Money and Windfalls

If you receive a bonus at work, a tax refund, or monetary gifts, you may be tempted to splurge on yourself. But if you set a rule in advance such as that you’ll put a certain percentage of any unexpected income, you can accelerate progress toward your goals.

Nowadays it’s easy to get on your phone and move money around to your various accounts, Joseph said, so it's easier to ensure “found” money goes toward your goals.

Other Ways to Save

A savings account can help you protect your funds, however, you could also invest them to grow your savings. You can invest in stocks and bonds or other assets through a brokerage account or a tax-advantaged retirement account like an IRA or 401(k). Consider consulting with a professional financial advisor who can help guide you through the risks and potential rewards of various investing strategies.

The Bottom Line

Savings accounts are great tools for safeguarding your money and working toward specific financial goals. If you have multiple goals, aligning each one to its own separate savings account can help you track your progress. Familiarize yourself with FDIC insurance limits and learn how interest rates and fees play a role in each account type to help you manage several savings accounts.

Also pay attention to terms and conditions so you can take advantage of higher interest rate opportunities, and avoid falling below a minimum balance requirement. Consider consulting a professional financial advisor who can review the pros and cons of having multiple savings accounts as it applies to your specific situation.