Should I Open a Second Checking Account?

How many checking accounts do you need? It all depends on your budgeting style, your bank, and what benefits you want. While there’s no obligation to open a second checking account, many people prefer to have more than one place to put their money. Read on for a few financial pointers to help you decide whether or not to get a second checking account.

Separate Money for Simpler Budgeting

All it takes to make a budget is pen and paper—but separating your money into different checking accounts can certainly simplify the process! You might designate one checking account for reoccurring bills like rent, utilities and car payments, but set up a second checking account to be used for other monthly spending like food, clothing, toiletries and so on. Having your funds divided like this can help to ensure that automatic payments don’t leave your account in overdraft, and will make it easier to see how much you can afford to spend at any given point during the month.

Take Advantage of New Perks

Most checking accounts offer some kind of benefits and perks to customers, whether it’s an opening bonus, cashback, reduced ATM fees and so on. Opening a second checking account can be a great way to reap some new benefits. The Harvard University Credit Union’s College Life Account, for example, offers 3% cashback on debit card purchases (up to $10 every month)—a rare benefit for debit accounts. Other perks of the College Life Account include free financial education workshops and financial counselling, plus a free pass on certain incidental fees.

Safeguard Your Emergency Fund

Financial experts recommend keeping an emergency fund with three to six months of living expenses, so that if your income is suddenly disrupted, you can continue to keep the lights on. An emergency fund should be kept in a liquid state, which typically means a checking account where you can easily access the money if needed. Putting your emergency fund into its own checking account offers the peace of mind of knowing exactly where your money is and helping to reduce any potential temptation to spend your emergency savings.

Earn More Interest, Without Investing

Checking accounts don’t generally offer a high interest rate, which is why many people choose to invest their long-term savings or put it into a high-yield savings account. Still, there are some checking accounts that offer interest—so if you find one, it could be worthy opening a second checking account. Again, the College Life Account for Harvard undergrads is a great example of this: it offers premium interest options to earn 2% APY on balances up to $10,000, meaning your money will be increasing in value in a low-risk, liquid environment, without you needing to lift a finger.

Manage Finances With a Partner

If you’re sharing household expenses with a spouse or partner, it could make sense to open a second checking account to jointly manage your finances. Many couples will open a join account to cover shared household bills or kids’ expenses, but still keep separate individual accounts to manage personal debt and spending. You could also open a second joint checking account as a couple to save for a special purpose, such as a wedding, honeymoon or family vacation.

Ensure Online Bank Funds Are Available

Using an online bank can offer advantages, but it can also create some headaches when accessing your funds; particularly if you need a larger than normal amount of cash, or if there’s no free ATM nearby. Opening a second checking account with a local credit union or bank is one way to ensure that your funds are accessible whenever and wherever you need them. And, as an added bonus, you’ll always have a physical person at your local branch to speak with if you need additional banking help or financial advice.