Importance Of Savings Accounts In Personal Finance
The benefits of opening a savings account include financial security, regular interest, and growth. That is why everyone should have a savings account. A lot of people also open multiple Savings Accounts. It helps them fulfil several financial goals, save money for various purposes, increase interest earnings, and enjoy the benefits of numerous bank services. Read on to learn the pros and cons of having multiple bank accounts.
Irrespective of your age, gender, profession, and income, opening a savings account is the first step you'll need to be part of the banking system. Whether you aim at buying a car or building your dream house, a savings account allows you to save some part of your income each month and eventually achieve that financial goal. It is a safe place to deposit your hard-earned money while keeping it easily accessible. Maintaining cash in a bank account generates interest, helping you grow your money.
Apart from protecting your money, a savings account provides insurance and a platform to invest and grow your capital. With mobile and net banking features, you can make or receive payments online to conveniently handle your transactions. With a savings account, you can better organise your finances, avoid unnecessary expenses, and build an emergency fund. Unique features and benefits include easy cash deposits and withdrawals, online funds transfers, SMS notifications, locker facilities, ATM cards, online bill payments, etc. Your savings account also provides you a means of applying for credit, opening a Fixed or Recurring Deposit, and availing many other banking services.
Must Read: Debit Card: Features And Benefits
Pros & Cons Of Having Multiple Savings Accounts
Multiple savings accounts enrich your financial management in many ways. Having two savings accounts or more can help diversify how you save, and what you get from it. You can set aside separate accounts for particular financial goals and monitor their progress. However, opening multiple savings accounts can have some drawbacks. You must be aware of them as well.
In the following sections, you can explore the benefits of having multiple bank accounts and explore their cons to make an informed decision.
Pros Of Having Multiple Savings Accounts
Online account opening procedures have made the process easy and quick. Let's look at the benefits of having multiple bank accounts:
1. Meet Multiple Financial Goals
You can use multiple accounts for each if you have different financial goals like education, wedding, home purchase, car purchase, etc. You can easily save your income for different purposes and better control your finances.
With more than one or two savings accounts, you can break up your financial goals, save money separately, and track your savings. For instance, you can open separate accounts for bill payments, loan EMIs, emergency funds, online transactions, etc. It helps track your financial progress and achieve your goals quickly.
2. Enjoy Multiple Benefits
Different banks offer unique services to their account holders. You can get the best of different banks by opening multiple savings accounts. Some banks offer high interest rates while others are famous for their excellent rewards and discounts programs. Finding a bank that gives you everything in one place can be challenging. And what about new offers that come around to beat old ones? Therefore, having multiple savings accounts with different banks lets you enjoy all existing and future benefits they'll offer.
3. Don't Depend on One Account
Sometimes, bank servers may be down, or there could be any other reason which stops their operations, online or otherwise. You may not be able to wait on one bank account, especially when you need funds in an emergency. Multiple accounts with different banks allow you to transact easily without depending on one bank.
Cons of Having Multiple Savings Accounts
While there is no limit to how many bank accounts a person can have, there are a few cons you must know before opening more than one. Here are a few.
1. Meeting The Minimum Balance Requirement
Most banks have a minimum balance requirement that you must always maintain. That means you leave a significant total amount in multiple savings accounts. If your bank balance drops below that threshold, you may have to pay penalties and extra charges. However, these days, banks like Kotak811 allow online accounts opening with zero balance.
2. Keeping Track of All Accounts
Keeping track of multiple savings accounts often becomes a hassle, as you must monitor funds, save money, and use them efficiently to achieve your financial goals. Sometimes, you may lose track of some accounts. Checking each account's balance separately often becomes a hassle and consumes time. Still, you can overcome this con by using the net banking facility and tracking accounts online from the comfort of your home.
3. Dormancy of Accounts
If you have multiple accounts in different banks, chances are you'll use only a couple of them for most transactions and forget about others. Not keeping an account active for long makes it dormant, and can invite charges and formalities.
How Many Bank Accounts Should A Single Person Have?
While a savings account is an excellent way to save money safely and spend it whenever required, there isn't really a limit on how many accounts a person can have. While there might be a confusion about whether we can have two accounts in the same bank, it depends on the bank's product policy, the account holder's financial goals and financial management skills.
Must Read: Types of Bank Accounts
Conclusion
As you can see, opening multiple savings accounts has its pros and cons. This is why it's important to evaluate your financial situation carefully and know your requirements before asking yourself? how many bank accounts can I have? If you choose to open two savings accounts or more, find a bank that offers an online account opening zero balance facility.
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This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
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