It’s common to keep the same current account open for years and stick to that one account, but that’s not necessarily the best way to manage your money. If you’ve never properly explored the question “Can you have more than one current account?” you could be missing out on a range of benefits.
There is no limit to how many current accounts you can have, provided you meet the bank’s eligibility criteria and you are able to do the admin that comes along with managing multiple accounts. For example, some banks require you to pay in a minimum amount or to have several direct debits leaving the account each month.
But if you have time to stay on top of multiple bank accounts and you’re motivated to push that household budget a little further, having accounts with different banks would allow you to take advantage of extra features and benefits.
Whether you know finance well or just want to maximise your money’s potential, we will help explain the benefits and disadvantages that come with having multiple bank accounts and even help point you in the right direction if you choose to open another bank account.
Is it necessary to have more than one account?
It is not necessary to open more than one bank account, however, doing so can have tremendous upside if managed correctly. Having multiple accounts is perfect for separating and organising your money and tracking your financial goals. It is important to look at your situation and the potential positives and negatives of managing multiple bank accounts before you open one.
What are the benefits of multiple bank accounts?
1. Trying out a new account
- Use other banks to see what features align with your end goals; whether that’s bill and direct debit management, savings pots or jars.
Having multiple bank accounts allows you to explore different companies and their offerings. It provides you an opportunity to try out new features and services that align with your financial goals, such as effective bill and direct debit management, specialized savings pots or jars. This can open your eyes to new opportunities that you may not have previously known about.
2. Earning interest
- While some banks offer interest on funds held in a current account, it's worth noting that many impose a maximum balance limit for interest-bearing accounts.
While most banks offer interest on funds held in a current account, it's important to note that many banks impose a maximum balance limit for interest-bearing accounts. By having multiple bank accounts, you can strategically distribute your funds to your various accounts and maximize interest earnings. Furthermore, you may even benefit from higher interest rates across various accounts and banks allowing you to maximize your return on your deposits.
3. Keeping track of your income streams
- It allows for better organisation and tracking of income, making it easier to report and manage your tax obligations accurately.
Owning multiple bank accounts promotes better organization and tracking of your income streams. It allows you to allocate money to specific accounts for different sources of income such as investments in one account and income from work into another. This makes it easy to report and manage your tax obligations accurately. This separation of incomes can facilitate financial management and simplify the process of budgeting and expense tracking.
4. Savings protection
- In case the funds in your current account exceed the £85,000 limit for FSCS (Financial Services Compensation Scheme) protection, it is advisable to distribute your money among multiple current accounts.
Distributing your money among multiple current accounts can provide an additional layer of protection and security for your savings. In the event that the funds in your current account exceed the £85,000 limit for FSCS (Financial Services Compensation Scheme) protection, it would be advisable to spread your money across multiple accounts to ensure that a larger portion of your savings is safeguarded in case of a bank failure or financial instability. Having money spread out in multiple FSCS protected accounts is a no-brainer but we must remind you that it is important to check that your accounts are FSCS protected.
5. Perks and rewards
- In case the funds in your current account exceed the £85,000 limit for FSCS (Financial Services Compensation Scheme) protection, it is advisable to distribute your money among multiple current accounts.
Banks may offer you perks and rewards when you open a new account with them. This can range from cashback on purchases, travel benefits, or exclusive discounts. Opening multiple bank accounts can take advantage of different reward programs which allows you to enjoy a wide array of benefits fitted to your spending and saving habits.
6. Savings
- In case the funds in your current account exceed the £85,000 limit for FSCS (Financial Services Compensation Scheme) protection, it is advisable to distribute your money among multiple current accounts.
7. Technical issues from your main bank
- Having a backup option becomes even more crucial in scenarios such as a technical failure at your bank or when your card is temporarily blocked due to suspected fraud. Instances of significant system failures have occurred in the banking industry, leading to customers being unable to access their funds.
In the scenario of a technical failure at your primary bank or a temporary block on your card due to suspected fraud, it is essential to have a backup option in the form of another bank account. Instances of significant system failures have occurred in the banking industry, leaving customers unable to access their funds. By having an alternate account, you can ensure uninterrupted access to your money when such situations arise.
What are the factors to consider when opening a second bank account?
- Some banks may have conditions like your salary being paid into it or set up direct debits from it. Disclaim to the reader that they thoroughly read the conditions of using the bank card.
- Applying for multiple accounts within a short time period could negatively affect your credit score.
- Evaluating your personal finances before opening a new account, there isn’t much point in having bank accounts that you don’t need.
When searching for the best fit bank to open your second account in, it is essential to take several factors into account to make an informed decision.
Some banks may have specific conditions like your salary being paid into it or set up direct debits from it. If this seems like it would be problematic to you then it is extremely important to read the terms and conditions of that specific bank.
Applying for multiple banks within a short period of time can have a negative impact on your credit score. When you apply for a new account the bank can inquire about your credit report which can temporarily lower your credit score. It is important to be aware of this and understand the impact that having multiple accounts can have on your credit score.
It is also important to evaluate your personal finances prior to opening a new account. You should take into consideration your financial goals, spending habits, and future plans for the new account. Having multiple bank accounts can be beneficial if used correctly, but serves little purpose if you have no money or use for that new account.
Strategies for managing multiple bank accounts
- Each bank account should have a clearly defined purpose such as savings or investments.
This will help you assign your funds appropriately to allow you to track your finances more effectively.
- Automating transfers and bill payments
You can set up automatic transfers from account to account. You can also automate bill payments by scheduling direct debits and recurring payments which can help you avoid late fees or even missed payments.
- Utilising online banking tools and mobile apps
Many of these banks have online tools and mobile apps that offer useful features such as transaction history and money categories. It is beneficial to regularly use these resources to control your account and track expenses.
- Regularly review and moderate account statements
You should review and moderate your account statements very regularly. This can help you detect any fraudulent activity or any issues with your accounts. Frequently reviewing your transaction statements can be a great way to moderate your spending and saving habits.
- Maintaining adequate account security measures
It is essential to protect your account. Create a safe and secure password and enable all other methods of security offered. Having a safe account can greatly decrease the risk of someone accessing your account.
Potential downsides and risks
- The increased temptation for overspending (especially if you don't have a clear budgeting and tracking system in place).
Having multiple bank accounts can be easy and tempting to overspend. This is especially the case if you do not have a clear budgeting and tracking system in place. Having multiple bank accounts can mislead your sense of your financial situation and can lead to confusion and spending mistakes.
- Difficulty in tracking and managing multiple accounts (If their funds are spread across multiple accounts, it can be challenging to consolidate and utilise them efficiently).
It can be difficult to track and manage accounts when funds are spread across them. This can lead to challenges consolidating and utilising funds efficiently. Furthermore, poor organisation and tracking can make it confusing to allocate your funds. This is an ineffective use of having multiple accounts.
- Increased complexity and effort (Balancing transactions, monitoring balances, and reconciling statements can become overwhelming, leading to potential errors or oversights).
Balancing transactions, monitoring balances, and reconciling statements can become overwhelming and lead to potential errors or oversights. Having multiple bank accounts is complex and requires effort to stay organised which is time-consuming and may not be your best use of time. It may be simpler for you to have one account that is well organised (HyperJar).
- Security and fraud risks (having multiple bank accounts means there are more accounts susceptible to potential security breaches or fraudulent activities. This is why it is crucial to maintain strong security practices).
Having multiple bank accounts means you have more accounts susceptible to potential security breaches or fraudulent activities. Managing multiple accounts requires you to have strong security and passwords across all accounts to minimise the risk of fraud or someone breaking in. Having different passwords and being knowledgeable of types of scams can be useful.
Alternatives to bank accounts
HyperJar is not a bank, but you’ll get the best bits of a bank, along with all the amazing features that HyperJar offers, and a Mastercard debit card. Unlike traditional banking apps and cards, we offer loads of money management and spending control features, to help kids and adults make the most of their money. And above all it's free, won't affect your credit score and you can use it as your spending and budgeting account alongside your main bank account.
What are you waiting for? Install the free app and get started now.
.png)