Rebecca Sowden

It is not uncommon to Bank at one institution with one Checking Account and one Savings Account, but why might it be beneficial to have more than one of all of those things?

While having multiple accounts at a variety of banks that are all the same type of bank is the least beneficial way to have multiple accounts, having accounts with 3 different types of banks can be beneficial. Different types of Banks excel in different areas of finance, here are the main reasons for having each.

1. Online Bank (Ally, SoFi, Capital One,etc.)– An online Bank is where you will find the best return on your savings. Traditional banks typically have a Savings APY of 0.10% or less, while a good online bank will have an APY of at least 4.00% (subject to change). Additionally, these banks are less likely to have monthly maintenance fees or account minimums. While the return on your money will not match an investment account, it is great for short to medium term savings goals.
2. Credit Union – Credit Unions are not for profit, meaning the financial health of its members are their top priority. While their savings rates are higher than traditional banks, they are still not as high as Online Banks likely due to credit unions having to invest and maintain their physical locations. However, credit unions shine in their loan rates. If you belong to a credit union you will have access to loans with more than likely a lower interest rate than if you went to a traditional, online, or secondary loan institution.
3. Traditional, Brick and Mortar (Chase, Wells Fargo, etc.) – These banks are best for their Credit Cards. While having a Checking/Savings account with them is arguably a waste unless you already have one and are able to avoid the fees without much trouble, some folks may be comforted by their abundance of physical locations.

Having multiple accounts (at the same bank) can help many people who struggle with budgeting. By breaking your money up into smaller, more focused sums, it is easier and quicker to see how much money you actually have for an intended purpose. Opening an account at a new (additional) bank can be used for aggressive compartmentalization, to keep money for things like Bills and your Emergency Fund out of sight. Making it easier to not pull money from those places for unnecessary reasons.