Having one checking account isn’t simply dangerous, it may very well be costing you money.
Numerous individuals solely have one present account. And in the event that they’ve not but switched it for some free money, they’ve most likely had it for a very long time.
However limiting your self to a single account – whether or not by way of loyalty, indifference or just not understanding you’ll be able to have extra – is a foul thought.
And opening up new accounts can deliver advantages when managing and accessing your cash – and even making some further money.
Maintain studying or watch this video to see why I believe you need to have multiple account.
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Can you might have multiple present account?
Let’s get this cleared up first. Although many suppose they’ll solely have one, there’s really no restrict to what number of you’ll be able to open from totally different banks. You would possibly even be capable of have multiple from the identical establishment.
As a result of my job, I’ve received quite a few present accounts (it’s really as much as 23 now), however most of you gained’t want something close to that many. In actual fact even simply having two might be sufficient.
And there’s little or no danger in opening and operating a number of accounts. I’ve shared a couple of issues to think about additional down the article.
10 causes to have multiple present account
Listed here are the principle causes I believe you need to open up further accounts.
In case your financial institution has technical points
We rely a lot on on-line and app banking these days that not having entry for even a couple of hours might be rather more than an inconvenience.
The TSB debacle a few years ago noticed individuals unable to entry their wages or pay their lease. Although the size of time the TSB techniques had been down has been an remoted incident, occurrences of web site crashes and app downtime for hours are more and more frequent at quite a few banks.
And the danger of this taking place to your financial institution is the primary cause why I believe you need to have no less than two present accounts. On this second account put sufficient cash in there that you may cowl necessities for a couple of days. When you can put extra, then even higher.
Guarantee that this second account isn’t a part of the identical group as these are inclined to share technical techniques. So When you’ve received a Halifax account, ensure the second isn’t Lloyds, and visa versa. And the identical for Natwest/RBS. I believe First Direct and HSBC have totally different techniques however it’s can’t damage to do the identical.
To separate your financial savings
After I was youthful I used to be responsible of simply having all my cash in a single account – financial savings and spending. Which meant that I didn’t ever actually know the way a lot I had in financial savings, and it was doable to “by accident” dip into these funds with on a regular basis spending.
The reply to keep away from that is to open up a separate account and transfer all of your financial savings over. Then arrange a standing order to repeatedly transfer more cash every month.
You can after all put this money in a traditional financial savings account, however the high charges proper now are in a handful of present accounts.
You will get 6% on as much as £4,000 with Santander, whereas there’s 5% for one 12 months on as much as £1,500 with Nationwide’s FlexDirect. You may as well get even higher charges, between 6.17% and seven% in linked common saver accounts with First Direct, Co-op Financial institution, Lloyds, Nationwide and NatWest that require a present account with that financial institution.
These are far greater than you’ll get wherever else for money financial savings proper now. I’ve written extra about the best place for savings right here.
To maintain your overdraft debt separate
This trick additionally works when you have an enormous overdraft. When you’re repeatedly within the pink, it may be arduous to trace how a lot for those who’re additionally spending out of the identical account.
However for those who open a separate account on your on a regular basis spending, you’ll be able to start to deal with and handle the overdraft debt as you’d every other owed cash, equivalent to a mortgage or bank card. That’ll assist you to deal with clearing it (particularly because you’re possible paying a huge 40% interest on that cash).
To guard your money from scammers
Sadly there are increasingly more scams geared toward your financial institution accounts. From faux telephone calls by way of to phone thefts, you’re in danger when you have all of your money sitting on one place.
In fact, if a criminal does get entry to at least one account, they could additionally be capable of entry others on the similar time, so ensure your accounts are protected in advance.
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To handle your cash with another person
Each couple manages their cash otherwise. Some solely have their very own accounts and that may work wonderful. However joint accounts are notably good for be part of bills.
You could have a chat along with your companion about what works finest for you, and it may very well be a joint account is a foul thought – particularly since it would hyperlink you on issues like your credit score report.
For assist with budgeting
I believe it’s price having a separate account too on your on a regular basis spending. You solely transfer over the money you need to half with, whether or not on a weekly or month-to-month foundation. In the end this may cease you overspending and likewise assist you to hold observe of the place your money goes.
There are specific accounts that make this lots simpler. Monzo, Chase, HyperJar and Starling are all actually good banks for this as in addition they have extra pots or areas to additional break down your spending.
To make some cash
When you solely need a most of two financial institution accounts a very good possibility is to ensure considered one of them goes to be making you cash.
There are plenty of accounts providing freebies equivalent to Disney+ and cinema tickets and even cash every month. The extra of those you might have the extra you’ll get.
One of the best might be a cashback present account. One from Chase will pay you 1% back on everyday spending through the debit card. The opposite from Santander earns 1% cashback on your bills. Except you don’t pay issues like Council Tax, power or broadband payments then you’ll earn a living.
To maintain switching
I’ve made plenty of money by switching from bank to bank and nabbing incentive bonuses every time. Now some individuals battle with the concept of switching as soon as, not to mention repeatedly, and partly that’s as a result of they just like the financial institution they’re with.
Effectively you will get round this by having a separate account that you just use for switching. The gives come and go (there have been none throughout lockdown), however there’s no hurt having an account prepared for if/when gives seem.
If it’s worthwhile to go right into a department
I’d additionally strive to make sure considered one of your accounts – and once more this may work for those who solely have two accounts – has a department that you may bodily stroll into if it’s worthwhile to.
Although I hardly ever want to enter a department today, there are occasions I do. Within the final 12 months I’ve needed to take out a considerable amount of money, signal varieties and pay in cheques (although as I wrote some banks allow you scan cheques via the app). And only some years in the past I popped right into a Halifax after there have been some fraudulent transactions on my card.
Sure you’ll be able to cowl plenty of this on-line or over the telephone, however I like the choice to enter a department if I really feel the necessity. And for those who’ve a number of accounts it’s simple sufficient to ensure a kind of is native.
For fee-free abroad spending
A last one so as to add to your pockets is an account with Chase, Starling, HyperJar, First Direct, Monzo and others all providing fee-free spending overseas. Right here’s extra in information to specialist travel cards.
A number of present accounts and your credit score rating
Earlier than making use of for a brand new account, ensure your credit score report is updated and there aren’t any apparent warning indicators. It’s because you may be credit score checked every time you open an account (besides with Monzo, Chase or Starling).
It’s price spacing the functions out somewhat than doing them suddenly. And for those who’re considering of making use of for a mortgage within the subsequent six months it’s sensible to only maintain off till that has gone by way of. However the danger is minimal.
I’ve written extra about how bank switching impacts credit scores right here.
Opening up extra present accounts
It’s very simple. You merely pick which account you want to open and undergo the appliance course of. You’ll enter particulars about your handle historical past and revenue, and share ID equivalent to your passport or driving licence.
Some accounts will allow you to do that utterly on-line, and can completely be the case for digital solely banks equivalent to Monzo, Starling and Virgin Cash. You’ll most likely have to add photographs of ID.
Others would possibly require you to go to a department with ID to finish the method. I can’t say which of them will and gained’t ask for this, however this occurred for my Natwest and Barclays functions.
How one can handle a number of present accounts
Some advantages that include extra accounts require issues like extra direct debits or minimal funds in each month. However there are tricks to manage this.
You may also battle to maintain tabs of your many accounts, however some banks allow you to add on accounts from different banks, whereas there are apps like Snoop and MoneyHub which mixture all of your balances onto one display screen. Password managers equivalent to Bitwarden additionally mean you can safely retailer all these totally different passwords and usernames.
And people solely actually develop into points in case you are having numerous accounts. If we’re speaking about opening simply two, three or possibly 4 accounts you shouldn’t have any issues.
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