How many bank accounts should you have: The number of bank accounts you have can play a critical role in how you handle your finances. With the latest trends in online banking, opening a new account online has become convenient without taking up much time. But that does not suggest you should open as many accounts as you can.
There is no specific answer on the ideal number of bank accounts one should have since we all handle finances differently for various requirements. But we can consider the pros and cons of various scenarios.
Many people end up having multiple bank accounts for different reasons such as a new salary account while changing jobs. A few people use a different account for investing purposes, for a home loan, or even for a specific requirement of an account with a government-owned bank.
Pros of having numerous bank accounts
Account holders get access to premium debit cards and can also take advantage of the rewards and discounts offered by different banks and end up having maximum savings.
Also Read: Personal finance tips.
Less dependency on a single bank
Banks are now highly dependent on technology, there are chances that they may face momentary downtime, and if you have one bank account and get caught in such a phase, then you are stranded, particularly when you require to make crucial transactions. Having multiple bank accounts can decrease this risk.
A different account for UPI transactions
The use of UPI has zoomed over the past couple of years. And the benefit of having multiple bank accounts is, if a transaction from one bank account cannot be done, you can swap to another bank and finish the transaction. Many people also keep limited funds in such a bank account to decrease the risk of loss that may occur due to online fraudulent activities.
Cons of having multiple bank accounts
Maintaining the minimum monthly balance
Account holders require to have a minimum balance in their bank accounts at the end of every month, if fails, it attracts a penalty. Every bank account has a different amount of minimum balance required.
Difficult in tracking finances
If you are not financially disciplined, then keeping track of many cards, net banking passwords, and cheque books can be unmanageable. Moreover, keeping track of transactions for so many bank accounts can be time-consuming.
Chance of account going inactive
Having numerous accounts means that you may not use some of your accounts actively. As per RBI, if you do not use an account for more than two years, then it is deemed dormant. This means you may not be able to utilize any services it offers and may end up paying fines.
Advantages of single bank account
Adequate control of expenses
All the money that you receive is available in one place and it gets easier to handle your money.
Easy to keep balances
Normally, account holders are mandated to maintain a minimum balance with the bank to avoid paying penalties, and having a single bank account can be advantageous.
Disadvantages of single bank account
Since digital banking is rising, the possibility of fraud is also rising. If you have a single bank account and become a target of fraud, then the effect will be significant.
Multiple purposes in a single account
If you have multiple purposes aligned with your finances, then having a single account can be a concern. If you have a single savings bank account and are starting a business, numerous transactions that a single account offer will not be able to live up to your purposes if you are predicting multiple transactions in a day.
Chance of server crash
If you have a single bank account and your bank face server downtime, then you will be stuck with no options, especially if you need to make immediate transactions at a required time.
How many bank accounts should you have:
It is okay for people to maintain up to 2 or a maximum of 3 bank accounts. You can easily carry and track them. There are lesser chances of the account getting inactive. You can effortlessly check activities. Instead of several low-category accounts, having fewer high-category savings accounts can offer you better benefits.