Can You Have Too Many Checking Accounts?

It’s hard to manage multiple bank accounts, but the benefits might outweigh the challenges.

If you need and can manage multiple accounts, more than one checking account might be appropriate. A checking account provides you easy access to your money for making payments by either writing checks or by using a debit card. The answer to the question “How many bank accounts should I have?” is based on your personal needs.

If you’re thinking about opening multiple checking accounts, consider these pros and cons. Whether you choose to have one checking account or several, look for a free checking account with no minimum balance.

Pros of Having Multiple Checking Accounts

Multiple Checking Accounts Keep Business and Personal Finances Separate

If you own a small business or are self-employed, multiple checking accounts lets you separate personal funds and payments from business transactions. If you operate as a sole proprietor, separate accounts provide useful records should your business be audited by the IRS. If you shop around for a new checking account, you’ll find free business checking accounts so you don’t accrue extra expenses.

Multiple Checking Accounts Help You Manage Your Family Finances

Couples could benefit by establishing a joint checking account which permits either partner access to the funds. This would ensure that money is available to pay for and manage the household expenses while eliminating the need for either couple to pay for these expenses from their personal accounts.

Multiple Checking Accounts Help You Establish Credit

While checking accounts don’t contribute directly to your credit history, credit applications request information about your bank accounts. If you have more than one checking account, it won’t be viewed by creditors as having too many bank accounts. Instead, it demonstrates to potential lenders that you have money management skills, according to Wells Fargo.

See: 15 Best Debit Card Rewards Programs

Multiple Checking Accounts Might Earn Interest for You

Not every checking account earns interest. If you meet certain conditions, however, many banks offer interest-bearing accounts. If all of your checking accounts are with the same bank, each account earns interest.

Multiple Checking Accounts Don’t Lower Your Credit Score

Unlike too many credit cards, multiple checking accounts don’t directly affect your FICO score or your ability to obtain credit. This is true, even if you don’t handle them responsibly and end up overdrawing or having other problems. In terms of affecting your credit score, this means you can’t have too many bank accounts.

Related: 10 Best Checking Accounts of 2017

Cons of Having Multiple Checking Accounts

More Accounts to Balance

You must reconcile your checking account each month, comparing the checks, debits, and other financial transactions against the available balance to make sure everything is correct. It takes more time to do this if you manage multiple accounts. Using personal financial software could help reduce the burden.

Related: Choose the Right Checking Account for You

Higher Chance of Overdrawing an Account

Overdrawing your checking account costs money, even if you have overdraft protection. The check will either be returned to the payee, incurring a fee for you, or you’ll pay overdraft protection fees. When you manage multiple accounts, you have more balances to monitor, which raises the chance of accidentally using the wrong account. Too many returned checks could cause the bank to close your account.

Negative Impact From a Bad Debit History

If you have trouble handling multiple checking accounts, your history of returned checks and any accounts closed by your banks is reported to check verification services and consumer reporting agencies like ChexSystems. A bad history could result in stores refusing to accept your checks and other banks declining your application for a new checking account.

Greater Risk of Becoming a Fraud Victim

Identity fraud affected 6.15 percent of Americans in 2016, an increase of 5.30 percent over the prior year, according to a Javelin Identity Fraud Report. Carefully checking your bank account statements for items such as unrecognized payments and checks that are out of sequence helps you detect fraud early. This consumes more time if you have multiple checking accounts.

Is It Bad to Have Too Many Checking Accounts?

Only you can decide if multiple checking accounts, or just one, is the right choice for you. Carefully consider the pros and cons of multiple checking accounts and then determine if maintaining more than one checking account is suitable for you.

Up Next: Does Having Multiple Bank Accounts Affect Your Credit Score?