Banks’ most basic type of account is the savings account, which allows customers to deposit money and withdraw it as needed. The consumer may withdraw the entire balance in the savings account, and there are no restrictions on the amount that may be placed. Savings accounts are essentially a tool for managing money and having one is necessary to have for a successful financial future.
Today, the majority of people living in cities have multiple savings accounts. While some people make good use of their bank accounts, others don’t. Each type of multiple savings account has advantages and drawbacks of its own. When people wish to save for many of these reasons, having multiple savings accounts is useful.
Here are the benefits and drawbacks of having multiple savings accounts:
Your money is maintained in a bank account gives you a sense of protection and safety. It is much better than keeping your money in a bank or other location.
A way to fulfill your financial goal
Keeping your money in separate accounts for different purposes will help you if you have multiple financial goals. Having a savings account is usually a good idea. With this, you can learn how much more is required, at which point you can adjust your saving rate accordingly.
You get the interest
You earn interest by keeping your money in a savings account. Even though the savings account interest rate is not more than the rate on Fixed Deposits or Recurring Deposits, it is still a smart move to make. As soon as your money is fixed, you are unable to withdraw from it; if you do so before the lock-in time, you will forfeit interest and other perks. Therefore, it is preferable to store your money in savings accounts rather than FDs if you are unsure of your needs.
Operating your money becomes easy
It becomes simple to manage your finances from a savings account. You can utilize the mobile app of your chosen bank, and there are also phone banking, net banking, and other options accessible via which you can conduct business while at home or elsewhere.
Multiple perks to cater to multiple goals
While some banks give bonuses for creating new savings accounts, others have competitive interest rates that benefit the account holder. A person who has many accounts may benefit from each one’s extra features. People who want to save money on things like bill payments, shopping, eating out, scheduling events and other services should consider this alternative. It makes it clear where you stand in relation to meeting your defined savings goals. Saving, for instance, for a new home, for higher education, for unexpected medical expenses, and so on.
Difficult to maintain a minimum balance
Every savings account has a minimum balance requirement that must be met. This minimal balance varies greatly from bank to bank. There may be times in life when one is short of cash. It becomes challenging to keep an account at a minimum balance in those circumstances. It becomes more challenging when there are multiple savings accounts. Additionally, it may need to pay fines and penalties over time.
A low-interest rate on the deposited amount
Savings account interest rates are set by banks. Since it is entirely dependent on the bank, this rate may differ from one to the next. When using multiple savings accounts, one runs the risk of not receiving the highest interest rate available from the other bank. Even if they have a bank account with the highest interest rate, they still cannot retain all of their funds there. Because they must keep a minimum amount in each of their accounts, which they have on numerous platforms.
Give rise to confusion
In general, the majority of people do not fully understand the advantages and disadvantages of their savings accounts. If there are many accounts, there may be even more uncertainty. This demands additional celerity because it is a financial matter. There is no room for misinformation or doubt in this situation, which could result in harsh penalties or low interest.
There are benefits to having several savings accounts, but there are also some drawbacks. More flexibility and better cash management are provided by having multiple savings accounts. Additionally, you can save money by paying less in fees and penalties. Having numerous savings accounts, however, should entirely depend on how frequently one transacts.