5 Advantages to Setting Up Multiple Bank Accounts

Bank accounts are not one-size-fits-all. Most Canadians have a chequing account to handle their daily bills and expenses and a savings account for emergencies. Are two accounts really enough?

Here’s why it might make sense to set up multiple bank accounts.

1. To use different accounts for different purposes

Bank accounts are not all created equal. An everyday chequing account, for example, might come with an unlimited amount of monthly debit purchases or transfers but likely won’t pay you any interest on your balance. Rainy day savings might be better suited to a high-interest savings account, where your money will grow. If you travel to the U.S. regularly, having a U.S. dollar chequing account might save you the hassle of converting currency each time you take a trip.

Nerdy Tip: Use labels and nicknames to keep track of multiple bank accounts.

Many financial institutions allow you to nickname accounts in your online banking, preventing you from having to memorize whether that long account number is your emergency fund or your joint chequing. Consider naming accounts after their purpose (like “emergency fund” or “vacation money”), so you can easily stay on top of your goals.

» See our picks: The best high-interest savings accounts in Canada

2. To take advantage of perks, promos and offers

Banks will offer bonuses to encourage new customers to sign up from time to time. Look around, and you may find a promotional interest rate on deposits into a new e-savings account, a cash bonus for setting up a new TFSA, or reduced fees for opening a new chequing account and setting up a bill payment or pre-authorized transactions.

» Know your options: The different types of bank accounts in Canada

3. To easily access shared funds

A joint bank account might be a good idea when it comes to sharing expenses or savings goals with your partner or family. This system allows both of you to access the funds while keeping your own chequing accounts separate.

» Ready for a change?: How to switch to a new bank or credit union

4. To help stay organized

Perhaps you’re saving for a trip, paying monthly bills or quarterly tax instalments, and building your emergency fund. Having an account geared towards each of these purposes will help you keep your money separate and allow you to track your saving or spending in each area more easily.

Nerdy Tip: Download an app.

Personal finance apps that link your banking and credit card information in one place might make it easier to track and visualize all of your account activity across multiple accounts and financial institutions.

5. To minimize risk

Canada Deposit Insurance Corporation (CDIC) deposit insurance only protects up to $100,000 of your funds per participating bank. If your funds exceed that $100,000 limit, you may want to consider maximizing your coverage by spreading your wealth to other banks with deposit insurance.

What to consider before setting up multiple bank accounts

Fees and transfer limits

Many bank accounts in Canada charge fees for monthly maintenance and some transactions. These extra costs have the potential to add up quickly with multiple accounts. According to the Canadian Bankers’ Association (CBA), 45% of Canadians pay between $1 and $15 in monthly service fees.

There’s some good news, though — the CBA also reported that nearly one-third of Canadians currently do not pay any service fees at all, and there are many no- or low-fee account options on the market.

Common ways to waive the cost include maintaining a minimum monthly account balance, opting for a no-fee electronic banking package, or taking advantage of no-fee service packages, such as those for seniors, students, youth, newcomers to Canada or Registered Disability Savings Plan (RDSP) beneficiaries.

» Watch out for hidden costs: Guide to common bank fees and charges in Canada

Minimum balance requirements

Some account types will waive the monthly fee if you maintain a minimum balance. Before opening a new account, consider whether it is a good match for your objectives.

Nothing is stopping you from opening accounts at several banks. If you are banking at more than one financial institution, make sure you remember to regularly check your account activity via your online banking, mailed bank statements or an app.

» MORE: What Is a bank statement?

Absolutely. Most banks will allow you to open multiple bank accounts, both chequing and savings. This is an easy and free way to move money around from one account to another when you need to and even schedule an automatic transfer between accounts.

No. Credit scores are a reflection of your borrowing activity. As your bank accounts are where you’re saving and spending your money, this isn’t reported to the credit agencies and having one — or multiple — bank accounts won’t impact your credit score.