Ask Clark: How many bank accounts should I have?

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How many bank accounts should you have?
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If you’ve received a bank sign-up bonus offer in the mail, you may be thinking about opening a new bank account. But how many accounts is overkill?

How many banks accounts do you really need? 

Have too many accounts and you risk throwing your finances into disarray. Have too few and you could be missing out on earning extra money on your deposits.

In general, money expert Clark Howard says that most people should have a minimum of two personal bank accounts:

  • Checking account: Money for paying bills and other short-term expenses
  • Savings account: Money that you may need to deal with life’s emergencies — health care, job loss, car repair, etc.

Editor’s note: Money for long-term goals like retirement should be invested, not kept in either of these accounts.

However, Clark says you may need more than two bank accounts in some cases. That’s especially true for couples and for those who use debit cards and/or payment apps. Read on to learn why…

Couples

Clark says couples should have a minimum of three accounts: His, hers and theirs.

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“Most people get married today quite a bit later than when they used to with each of them having established their financial lives,” Clark says. “They tend to have different attitudes about money. Co-mingling all of their funds, particularly early in the marriage, can lead to a lot of stress and tension.”

When it comes to the household account, the couple has to decide how much each will contribute.

Sometimes people contribute to the overall household expenses based on how much each one earns. In other cases, couples will just contribute an equal amount to the mortgage or utilities or whatever other expenses this account covers.

Debit card or payment app users 

Are you a fan of using debit cards or payment apps? Then you should also have more than two bank accounts, according to Clark.

Let’s look at debit cards first, which people use either for convenience or because they don’t like carrying cash. Debit cards can be deadly to your finances if the card gets stolen.

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That’s why Clark recommends you always tie a debit card to a separate bank account — not your main checking account.

Meanwhile, the popularity of payment apps like Venmo, PayPal and Zelle poses a similar challenge. Fraudulent transactions have drained people’s accounts and the powers that be behind these payment apps haven’t made customers whole.

“What I like is for someone to have a separate checking account if they use Zelle and all the rest, or if they want to have a debit card,” Clark says. “In that separate account, you should only have enough money in there that you need for your walking around money if you’re using debit or as a way to pay back friends, split bills and that sort of thing if you use payment apps.”

Final thought 

As a general rule, one checking and one savings account is a good place to start. Of course, your situation may warrant additional accounts.

If you find yourself chasing sign-up bonuses and end up with more accounts than you can handle, that’s the time to simplify and reduce the number of accounts in your life.

Too many people have both their checking and savings accounts with a traditional bank. But, as we all know, the interest rates the big banks pay on your hard-earned money are paltry.

If you want to earn more interest, try looking at one of the FDIC-insured online banks that made Team Clark’s list of the best!

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