It is a simple question, but not always an easy one to answer. The answer depends on your lifestyle, financial goals and how much you want to separate your spending, savings and bills.
Some people are happy with one account. Others swear by having five. So, how do you decide what is right? Let's break it down the smart way.
Having one bank account may seem more straightforward and be an obvious choice. However, one account can make tracking your money in different budget categories difficult. For example, if your money for bills is not separated from your everyday spending, you may accidentally dip into it when going food shopping. This makes it challenging to stay on budget and ensure you have money set aside for fixed expenses like subscriptions, rent and bills.
Multiple accounts help curb the temptation to overspend. For example, if you see you have £2,000 in your current account, it may feel like you have lots of money to spend. However, the reality is that £1,200 of this may need to go towards your rent and bill payments. Splitting your bills and everyday spending into separate accounts may make it easier to stay on track with your spending and meet your savings goals.
So, what is the best number of bank accounts? Well, you don’t need ten accounts to get organised. Many people find that three or four is enough. Here is one approach that works for a lot of people:
This is your main account for paying bills, receiving direct deposits, such as your salary, and using your debit card. This is the account you check most often. You can use an account with banks like Monzo to divide your spending into "pots", such as one for bills, one for groceries and one for restaurants, shopping etc.
Traditional savings accounts can help you keep your savings, like your emergency fund, separate from your spending. They act as your financial buffer for unexpected expenses, like car repairs or a sudden bill. Look for high-interest savings accounts or money market accounts with higher interest rates and easy access to make the most of your money.
If you are saving for a house deposit, a holiday or something else, having a dedicated account for that goal may be a good idea. Some people like opening multiple savings accounts, one for each goal, to make it easier to track their progress.
A joint account can simplify things if you share costs with a partner or flatmate. You can each contribute a set amount to cover rent, bills or food shopping while keeping your own accounts separate for personal use.
Not necessarily. Some people prefer to keep all their accounts with the same bank for convenience. Others spread their accounts across multiple banks to take advantage of different features, better interest rates or easier budgeting.
Try an online bank or a credit union, especially if you are looking for lower fees or a better rate on your emergency fund. Remember to check if there are any minimum balance requirements to benefit from higher rates and how easy it is to transfer money out of the account in case you need it sooner than you anticipated.
As you can see, the answer depends on how you manage your finances. For some, one account is enough. For others, having multiple bank accounts means it is easier to stay organised, save more and avoid falling into a negative balance.
The key is to set up a system that works for you. Whether you are building a safety net, planning for significant expenses or just trying to stay on top of everyday spending, the right mix of account types can make a big difference.
Start with a tiny change, like opening a new bank account for a specific goal and go from there. Smart money management is about finding a system that fits your life, not vice versa.
UK Bank Closures & Alternative Banking Options
Does Closing Your Bank Account Hurt Your Credit Score?
For more helpful information about how to manage your money, different financial products or what we do at Polar Credit, take a look at our Info Hub.