How many bank accounts is the right number for you? This may seem like a simple inquiry, but the answer might have far-reaching consequences for your wallet.
As everyone's financial situation is unique, there is no universal answer to this issue. So, this post will discuss the benefits and drawbacks of maintaining several bank accounts, and you may make the call based on that information.
The advantages of keeping more than one bank account include:
Simple Record-Keeping for All Business Deals Direct Benefit Transfer from the government, pension account, income tax payment and refunds, etc. are just a few examples of the many ways a person's savings account can be used. While it is possible to conduct all of these activities through a single account, maintaining different accounts allows for more streamlined record-keeping. Less Reliance on Any One Financial Institution Access to your money at a bank nowadays typically involves using a variety of digital services. In case you have more than one account and ever have trouble accessing one of them, you may always use the other ones to make purchases. As a result, you may be assured that progress on your project won't be slowed down.
Advantageous in terms of cost effectiveness for frequent ATM users Nowadays, automated teller machines (ATMs) are the standard for getting cash. There is a monthly limit on the amount of free ATM withdrawals most banks provide. It costs money to make any more withdrawals. Having numerous accounts might help you save money on monthly ATM fees if you make repeated withdrawals from separate accounts – different debit cards.
Account Used Only For Electronic Payments Through The UPI There has been a rise in UPI-based and online transactions in recent years. Unfortunately, this has given fraudsters a new way to access your account without your knowledge. Several people set up a separate account just for use with online and UPI transactions, and they only deposit a little amount of money into it at any given time. In the case of a password leak, this helps to mitigate the damage.
Drawbacks of Keeping Many Separate Bank Accounts
Minimum balance issues First, always making sure your accounts are at or over their minimum and average balances The minimum balance that must be kept in a checking or savings account varies per institution. It is your responsibility to see that all of your accounts fulfil this minimum/average balance criteria if you have more than one.
Issues with Dormant Accounts According to regulations set forth by the Reserve Bank of India (RBI), a dormant account is one that has not been accessed by its owner for more than two years. This might result in penalties or fees from the bank, as well as the termination of any associated services. More so, thieves may easily get access to and utilise inactive accounts for illicit purposes.
Keeping tabs on and overseeing all financial accounts When you have more than one bank account, you need to make sure that your statements are in order, your contact information is up-to-date at each institution, and you are making the most of each bank's offerings. This may take some time.
