Is It Smart To Have Multiple Savings Accounts?

With increased prices on everything from groceries to housing to cars, saving money every month might not be at the top of your priority list. As household finances tighten, setting and/or achieving savings goals can feel especially difficult. Perhaps that's why 28% of Americans reported having less than $1,000 in their savings, according to an August 2024 Forbes Advisor survey. Respondents also reported housing costs and debt repayment were the top barriers to their ability to save more. While saving money can sometimes feel impossible given today's current economic climate, even small monthly gains can add up to significant progress long term

Starting your savings journey can feel daunting; however, there are some simple and easy ways to start you on your way. From considering higher yield accounts to potentially switching banks, there are many different ways to get started toward a specific savings goal. And for those who might need to juggle multiple savings goals simultaneously, utilizing more than one savings account could be an especially beneficial option. With that said, according to a 2023 survey from GOBankingRates, just 35% of people reported already having two or more savings accounts.

While there can definitely be more upfront research and work required when considering multiple accounts, the pros can ultimately be worth the extra leg work. Let's dive into the benefits of keeping multiple savings accounts, and some things to look out for when shopping for a new bank and/or account. (See a few brilliant ways to trick yourself into saving money.)

At its simplest, having multiple savings accounts can help keep you organized during your savings journey. As budgeting blogger Andrea Woroch explained to BuySide from the Wall Street Journal, "It can help you manage your finances and make better spending decisions." By having the ability to separate out your money into different savings accounts, it can not only become easier to visualize your savings progress, but also help ensure your different saved amounts stay tied to their intended goals.

Whether one account is directed toward buying a new car or another account is geared toward a dream vacation, keeping those goals separated can help you ensure your savings goals don't bleed together. Similarly, it can be particularly important to keep your emergency savings fund separate from other savings accounts and goals to ensure that money doesn't end up being spent on non-emergency purchases.

As for consumers who have considerably more savings, keep in mind that there is such a thing as having too much money in a savings account. It's important to realize that a savings account balance is only insured by the Federal Deposit Insurance Corp. up to $250,000. This means that in the event of your bank's failure, the federal government will protect your savings only up to that amount. For anyone looking to save over the $250,000 limit, having multiple savings accounts can ensure your total savings amount remains FDIC-insured. Another consideration is finding a high-yield savings account that offers an annual percentage yield (APY) that's higher than the current rate of inflation.

There are a lot of different elements you should keep on eye on when shopping for a new bank, and savings account terms can be especially important. Not only do you want to make sure you have a solid understanding of both the associated fees (if there are any) of your account but also what the minimum balance requirements might be for your account. Similarly, if you decide to keep multiple savings accounts with the same bank, make sure you know how each account might affect the other. Knowing your account terms can help ensure your hard-earned savings are allowed to grow rather than getting hit by fees that go to the bank instead.

A particularly concerning trend to look out for, especially if you're looking into high-yield savings accounts with online-only banks, is whether or not the bank is actually paying you the APY rate it promised. Some online-only banks (such as Capital One, UFB, and CIT Bank) have been accused of falsely advertising APY rates that they are not actually paying their customers, with many of these consumers being none the wiser. 

Ken Tumin, founder of DepositAccounts.com, explained to The Wall Street Journal how this sneaky tactic can affect consumers. "Only the biggest rate chaser that's monitoring what the bank is offering every week and what their account is paying will notice that," he said. "The vast majority of people won't be that observant." Similarly, older savings accounts have been frequently kept at lower APY rates, despite banks advertising high-yield rates on newer accounts.