You are free to open however many bank accounts as you need using financial institutions that give you the green light. Managing multiple accounts requires more time and effort, but has clear advantages.
It's possible that you already use many bank accounts. Many individuals use a current account for their day-to-day transactions and then put any surplus into a savings account.
Many situations call for the creation of a second or third checking account. Perhaps you and your significant other might benefit from opening a joint bank account so that you can split the cost of everyday living expenditures.
It is recommended that business owners retain their financial transactions related to their firm in a separate bank account. On the other hand, certain accounts may provide attractive benefits, such as no fees for international transfers.
Can I have multiple bank accounts — At a Glance: Pros and Cons
While you can indeed have multiple accounts, why is it beneficial to have many bank accounts?
There are a few scenarios in which you might benefit from maintaining several bank accounts. For example:
| Pros | Cons |
|---|---|
| ✔️ Keeping your income and expenditures in two accounts, rather than one, may make budgeting easier. This is especially true if you and your spouse share a household. | ❌ Managing your finances may get more complicated. |
| ✔️ You can start putting away money for a vacation, house upgrades, or an emergency fund by establishing a second bank account. An easy access or regular savings account, on the other hand, offers a higher potential for interest earnings on your savings. | ❌ Increased potential for fraud; criminals get an additional entry point with each new account. |
| ✔️ When you're self-employed or running your own company, it's important to keep your business finances distinct from your personal finances. | ❌ Credit scores may temporarily drop if several account applications are made within a short period of time. Overdrawing on several checking accounts might have a negative impact on your credit score. |
| ✔️ If your primary account is blocked due to card theft, suspected fraud, or the bank experiencing a technical issue and locking you out. | ❌ Additive fees. There may be a price associated with maintaining some types of bank accounts, such as bundled accounts. If the benefits you get from the account outweigh the cost, then it's not an issue. |
| ✔️ The first £85,000 you deposit in a UK bank or building society is fully insured by the Financial Services Compensation Scheme (FSCS). In the event of the bank's failure, all funds in excess of this amount will be lost. | |
| ✔️ If you plan on making purchases or withdrawals while abroad, you could save money by opening a foreign currency account and transferring funds from your regular account into it. | |
| ✔️ Try out the service and features of a new financial institution before committing to a full switch if you become dissatisfied with your current bank. |
Can I have more than one bank account?
Yes. There is no upper limit to the number of checking and savings accounts you may maintain. It's a fallacy that you can only have one account.
A number of other types of accounts, including joint and savings accounts, as well as “every day” checking accounts, are often available at the same financial institution.
So, how exactly should I go about changing my bank?
The good news is that it's simple to swap bank accounts instead of just starting a new one.
You can switch banks without any hassle in as little as seven business days with the help of the Current Account Switch Service, which is available for 99% of all current accounts. The service protects you against payment errors by promising that your new financial institution will make good on any mistakes.
Pick a new banking service and apply for a new account. Make sure it has all the functions you need and that the customer support has good ratings.
The next step is to use the new bank's migration service to complete a switchover, allowing them to notify your previous bank of the changeover.
The banks will handle the transition after you've decided on a changeover date (which must be at least seven days after you created your new account). After the transfer date, your old account will be closed and your new account will be set up for incoming and outgoing transactions.
When creating numerous bank accounts, what do I need to be careful of?
A bank can require you to meet certain specifications. For example, that you have your paycheck deposited there, or that you arrange for automatic bill payments to be made from the account. If you can pass another bank's credit check and maintain a minimum monthly deposit amount, that bank will gladly create an account for you.
Keep in mind that if you have more than one bank account, you may transfer funds between them to meet these needs. However, before opening a bank account, you should read the terms and conditions carefully.
There's no use in creating a bank account if you won't be using it and the costs will be too much to bear. Don't apply for too many accounts at once, since this might have a negative impact on your credit rating.
Examine your current financial situation thoroughly before opening a new account. A bundled account to earn a reward can seem like a no-brainer, but if there is a price, starting a joint account could be a better option for managing family funds.
Opening multiple bank accounts: The Verdict
If you're on the fence about creating a second bank account, consider these benefits instead:
✔️ Set up a joint account with your significant other and transfer in an agreed-upon amount each month to meet household expenditures, making bill payments fair and upfront and preventing fights over who is responsible for what. Consider chipping up a little bit more each month to buy sweets to share.
✔️ Whether you're putting away money for a down payment on a house, a vacation, or emergency repairs to your boiler, it's a good idea to save for a variety of purposes. You can, for example, split your monthly earnings across three separate savings accounts by setting up automatic transfers.
✔️ Gain more interest by moving your savings to a current or bundled account, where you may be eligible for greater interest rates and other benefits. It may be worthwhile to establish a bank account if you qualify for a current account rate that is higher than the average.
✔️ If you have many jobs or rental income, it's a good idea to keep track of each source of money in a separate bank account. In certain cases, this may simplify the process of filing tax returns.
✔️ If you're having trouble sticking to a budget, one suggestion is to open many bank accounts and use each one for a certain category of expenditure. Rent or mortgage payments, utilities, groceries, and entertainment might all go to different accounts.
✔️ If you own a business, it's a good idea to create a separate business checking account to keep corporate funds apart from your regular checking. Taxes can be computed more quickly and your company's progress may be monitored more closely.
✔️ If your bank has a technical malfunction or your card is frozen due to fraud suspicion, you may still access your funds using a backup method. Banks have seen spectacular system failures in which clients have been locked out of their accounts for many days, if not weeks. For instance, up to 1.9 million TSB clients had lockouts of their accounts for several days while others experienced issues for more than a month when the bank switched to a new IT system in April 2018.
✔️ Take comfort in knowing that your investments are safeguarded in the event of the failure of your bank, building society or credit union thanks to the Financial Services Compensation Scheme. However, it can only cover up to £85,000. If your funds exceed this amount, you may wish to create a second savings account.
✔️ Take advantage of bonuses and savings opportunities by creating a bundled account if your monthly income is high enough to warrant doing so. Customers who pay a monthly fee or deposit a certain amount into their packaged bank account may be eligible for higher savings rates and other perks, such as insurance for trips and electronic devices.
✔️ Make use of foreign money without incurring additional costs by opening an account in a foreign currency. Instead of making many trips to the Bureau de Change or incurring hefty fees whenever you make a cash withdrawal while overseas, you may save time and money by opening a foreign currency account that is linked to your regular checking account.
✔️ If you're tired of the limited hours and high fees at your current bank, try one of the “challenger banks” that are emerging to compete with the big boys. Some, like the well-liked Monzo and Starling, are app-only and include features like bill splitting and customizable savings and spending accounts to make budgeting simpler.
