Having multiple savings accounts isn’t just for financially irresponsible kids and young adults, they’re actually the perfect solution to your financial goals. Having multiple accounts means that you can allocate your income to different places and potentially even get higher interest rates for doing so. You can also monitor each specific goal through its designated account—so long, late nights calculating percentages and writing up algorithms! Ultimately, having multiple accounts allows you to save for specific financial goals, providing you with the springboard to achieve financial success faster.
3 Reasons To Have Multiple Accounts
- As mentioned briefly above, having multiple accounts is a launching point for you to achieve financial success. By having separate accounts, you can see real progress happening each week, and devise new ways to save even more. With the simplicity of mobile banking, saving more money is easier than ever and tracking your progress is a breeze.
- Each different savings account likely has a different rate of interest. This is where the research comes in: many accounts, like a CD, will give you higher interest rates for stowing your money away and not touching it for a few months. Having multiple accounts can yield a higher amount of accumulated interest, further growing your pre-existing savings bundle. It’s important to learn the terms of any account before opening it, however, be aware of any and all surprise fees or limits!
- Segmenting your goals into separate accounts gives you the ease of prioritizing which objectives need a little more TLC. You can monitor the progress of each account via online or mobile banking, and make the decision of how you want to distribute your savings. Let’s say you’re saving for both a car and holiday purchases. Naturally, since the holidays are fast-approaching, you may want to transfer a higher percentage of funds to your holiday account. Ultimately, having separate accounts allows you to quickly and easily set up a budgeting system and stick to it.
A Good Strategy: Set up Automated Payments
From credit cards to debit cards, and all the bills in-between, automated payments should become your best friend in the financial world. The perk of using this nifty tool is that you never have to think about making your payments or transfers each month. This financial responsibility can also help further improve your credit score and report, saving you even more money in the long run.
What to Watch Out For
- Fees. The last thing you want when you’re trying to save money is for a huge chunk of change to be removed as soon as your money goes into the account. And you certainly don’t want to be blindsided when you haven’t done your proper research. Check in with your credit union to see if they bill you for things like transactions and overdrafting, and what accounts will help keep fees to a minimum. There’s no one-size-fits-all to savings accounts. Remember: this account should help you save up for future goals, not give you unnecessary anxiety.
- Transfer Limits. There’s nothing worse than needing to transfer money out of your savings account for an unplanned event, but finding out you’ve hit your limit on transfers for the month. You then have to make a choice: forgo the cash or pay an unfortunate fee. Beware of Transfer Limits that only let you transfer money out of your savings account a certain number of times. Typically the limit is six transfers per month on certain withdrawals and transfers according to Regulation D from the Federal Reserve. If you feel like you the limits won’t be a problem for you (especially if you’re fulfilling a strict financial goal), then dive right in. But if you have a doubt in your mind, an account with stern transfer limits may not be the right fit. Regardless, be sure to discuss potential transfer limits with a banking consultant before signing off.
Saving up for a special purchase? Want to put money away for your long-term plans? Try opening a second account. At Common Trust, we have so many ways including our Holiday Clubs, certificates, and various tailored savings and credit accounts. Your purchase could be right around the corner – give us a ring or reach out via email today!