8 Benefits of Opening Multiple Bank Accounts - Multiple Bank Accounts

 Nowadays, many people are opening multiple bank accounts due to various reasons, be it a job switch or for business purposes. However, the fundamental benefits of having multiple savings accounts are still in question. So, let's delve deep into the matter and discover some of the advantages that opening multiple bank accounts can have.

Save Money for Various Short-Term Goals

Often, when all you have is a salary account, it gets difficult to actually save money. Having an additional account can be of real help in this regard.  You can assign a goal to each account that you have and deposit money in them accordingly. Let’s discuss this with an instance - Say you are a travel enthusiast and wish to go on a foreign trip every year. So, you can open an account dedicated to that purpose and save a certain amount of money in it every month. Multiple bank accounts can thus help you save money diligently for short-term goals; however, make sure that you use the second account only for storing money, and keep yourself from withdrawing it unless entirely unavoidable.
Open Multiple Need-Based Accounts to Track Your Money

Nowadays, the government offers several services to different sections of people, under which you could get a subsidy in your account. For example - Under the Direct Benefit Transfer (DBT) scheme, the government transfers money as subsidies for LPG gas directly into your savings bank account if you come under a certain bracket, and there are around 400 more such schemes. Hence, it is beneficial to have a separate account for these subsidies. Likewise, you can have a separate account linked with your income tax returns, where you can receive refunds as and when applicable for you. If you are a pensioner, then it is better if you receive your pension in a dedicated account, as it makes tracking the funds easy.

Thus, it can be advantageous for you to maintain multiple bank accounts based on your different needs.
Keep Your Options Open

Having multiple bank accounts could also help you get through certain unforeseen circumstances. In case you face technical difficulties during a transaction from one of your bank accounts, you can always fall back on another account of yours to get it done. This can prove to be helpful especially in case of emergencies, and you will not be left without any options when you hit an unexpected roadblock.
Create an Emergency Fund

Dedicate an account exclusively to saving for an emergency. At the start of every month, transfer a specific amount of money to this account through a standing instruction to your salary account. An emergency fund will help you sail through tough times by providing you with a financial cushion at times of need.
Avail Different Perks from Multiple Banks

Different banks in India offer distinct interest rates and perks. Having multiple bank accounts gives you access to the best of such benefits. Holding a savings account in one bank and maintaining a good relationship with it could help you in availing a home loan with relative ease. Whereas, some other banks may offer higher interest rates on savings accounts. You may be eligible for rewards, exclusive facilities, and bonuses at other banks. Thus, the sheer variety of benefits offered by different banks makes it a good idea for you to hold accounts in many of them.
Avoid ATM Transaction Charges

Banks allow five free transactions from their own ATMs and three from ATMs of other banks. After these eight transactions, the bank starts charging you if you use an ATM with the same debit card. However, if you hold debit cards of two bank accounts, then, you can make up to 16 free transactions in a month.  
Avail Free Cheque Books

Usually, a bank offers only one free checkbook in a year. If you request for another checkbook in that financial year, the bank will charge you. However, If you have two bank accounts, then you can avail of two free checkbooks in a year.
Increase Your Credit Card Limit

Nowadays, banks often offer a credit card when you open an account with them. So, if you have two different bank accounts and credit cards issued from both of them, then the amount of credit that you can use will increase.

7 Dangers of Owning Multiple Bank Accounts - Disadvantages of Multiple Bank

 Many people have multiple bank accounts nowadays, owing to one reason or another. It may be a good idea in some cases - if you are a businessman and your transactions are enormous, or if you have need-based accounts. However, there are certain cons of multiple bank accounts which you should consider before opening a new one.

Disadvantages of Multiple Bank Accounts
1. Service Charges

Are you aware that savings accounts are not free?  This means that you need to pay a few minimal charges for availing services such as debit cards, SMS alerts, ATM use, etc. Moreover, service charges for non-maintenance of monthly average balance alone can go up to Rs. 600 in banks like HDFC. Therefore, if you have multiple bank accounts, you will end up paying more service fees.
2. User ID and Password

If you have multiple bank accounts, then you will have to keep different user IDs and passwords for each bank's internet banking.  Imagine a situation where after every six months banks ask you to change your password for security reasons, and you have to do it for 3-4 accounts. Wouldn’t that be cumbersome for you? Even if you were to maintain a diary for jotting down the passwords or save them in a phone, is it really safe to do so? What if you lose your diary or mobile? These questions do a good job of reminding us that it is difficult to handle multiple bank accounts.
3. PIN

Holding multiple bank accounts means that you would have numerous debit cards. For each debit card, you require a different PIN. Now, imagine a situation where you lose your wallet, and you had four debit cards and two credit cards in it, which means that you are supposed to call at least four banks to block your debit cards. Even if you were to take the effort of keeping all your cards safe, It is also hard to keep track of many PINs at once. Therefore, to avoid such predicaments, it is better to not have multiple bank accounts.
4. Minimum Balance Maintenance

If you fail to maintain the average minimum balance in any of the accounts that you have, you will face penalties. The minimum balance starts from Rs.2000 and could be as high as Rs 1.5 lakh for some banks in urban areas. For others, it usually remains in the range of Rs 5,000-Rs 10,000. Hence, the more accounts you have, the more cash you would have to maintain a minimum balance in them. Let's discuss this with an instance - if you have an account each in PNB, SBI, and HDFC Bank, then you will be required to keep at least Rs 17,500 as minimum balance unless these are zero balance accounts. Your zero-balance salary accounts automatically get converted into regular savings accounts once you switch your job and get a new salary account. Then these accounts will also require minimum average balance maintenance.
5. Ineffective Use of Money

Maintaining a minimum balance in several accounts means that you lose the opportunity to use the same amount in lucrative investment instruments - FDs, mutual funds, and recurring deposits - where you could get higher returns as compared to the interest rates of savings accounts.
6. Misuse of Inactive Accounts

If you are not able to keep tabs on your accounts, you could possibly have a dormant savings account. Unscrupulous people may notice the dormancy of your account and find ways to misuse it, mainly if the savings account carries a balance. Also, you earn low-interest rates on inactive accounts.
7. Difficulty in Tax Filing

Having too many interests and income-generating accounts means that your paperwork will increase during tax filing. Gathering information and statements from multiple bank accounts at the time of filing IT returns is a cumbersome job; you may commit mistakes due to heavy paperwork, and it could cost you a considerable amount of money. However, consolidating your finances into one or two accounts can help in this regard.