In today’s fast-paced financial landscape, many of us find ourselves juggling multiple bank accounts. The reasons for owning several accounts can vary, from managing different financial goals to seeking the best offers and security. However, it’s essential to strike the right balance when it comes to the number of savings or bank accounts you should have. In this article, we’ll explore how many bank accounts can a person have in India.
Are You Allowed to Open More than One Savings Account?
First and foremost, there’s no fixed limit on how many bank accounts you can have. The number of accounts you should maintain depends entirely on your financial objectives. Managing multiple bank accounts with specific purposes can provide clarity and help you achieve your goals more effectively. Therefore, having more than one account can be a strategic move, allowing you to separate savings from everyday spending.
Why You Should Consider Having Multiple Savings Accounts?
Maximizing Offers
Owning multiple bank accounts can open the door to various offers and benefits. Many account holders gain access to premium debit cards and can take advantage of rewards and discounts offered by different banks. By spreading your finances across multiple accounts, you can maximize your savings and enjoy a wider range of financial perks.
Reduced Dependency on One Bank
In an era where banks heavily rely on technology, there’s always a risk of temporary downtime. If you have only one bank account and it faces an outage during a crucial transaction, you might find yourself stranded. By maintaining multiple bank accounts, you can mitigate this risk and ensure you have alternatives at your disposal.
Separate Account for UPI Transactions
The use of UPI (Unified Payments Interface) has surged in recent years. Having multiple bank accounts can be advantageous in case a transaction from one account encounters issues. You can quickly switch to another bank to complete the transaction. Some individuals also keep limited funds in one of their accounts to minimize the risk of loss due to online fraudulent activities.
Safety and Insurance
Few people are aware that scheduled banks offer insurance coverage for bank accounts up to ₹5 lakh in the event of a bank failure. Hence, consolidating all your funds into a single account that exceeds ₹5 lakh can pose a significant risk. Maintaining different bank accounts ensures that each of them is covered by insurance, providing added protection for your savings.
Managing the Average Monthly Balance
Most savings accounts require account holders to maintain a minimum balance at the end of each month or quarter. Failing to meet this requirement can result in penalties. The minimum balance typically ranges from ₹5,000 to ₹10,000. If you have multiple accounts, you can distribute your funds to meet these requirements, avoiding unnecessary charges.
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Tips for Deciding How Many Bank Accounts You Should Have
Minimum Monthly Balance
Nearly all savings accounts come with a minimum balance requirement. To avoid non-maintenance charges, it’s essential to track and meet these requirements. While it’s easier to manage this for one or two accounts, maintaining the minimum balance can become challenging when you have multiple accounts. Be mindful of your capacity to meet these obligations when considering the number of accounts, you should have.
Facilities Offered
Before opening a bank account, consider the facilities you need. Do you require a premium debit/credit card, locker facility, zero charges on cash deposits, or higher ATM cash withdrawal limits? Choose bank accounts that offer most of the necessary facilities at the lowest costs and with a reasonable minimum balance requirement. Avoid financial institutions that charge high annual maintenance fees for services you won’t use, ensuring that your accounts align with your financial requirements.
Deposit and Withdrawal Limits
Some savings accounts restrict daily deposit limits and withdrawal limits. If you foresee needing to withdraw substantial sums, having multiple accounts can be advantageous. You can distribute your funds across these accounts and access the money you need, especially in situations where one account’s limit might not suffice.
Bank Charges
Banks may impose fees for various services. As a responsible customer, familiarize yourself with the fees and charges associated with your accounts. Often, customers are unaware of these charges until they encounter them. Gather all relevant information when opening a bank account online or offline and remain vigilant about potential fees.
Cost-to-Benefit Analysis
Before opening or maintaining multiple bank accounts, conduct a cost-to-benefit analysis. Calculate the amount you need to keep in each account, considering the low interest earned. Compare the benefits offered by each account to the total annual charges. If the benefits outweigh the costs, it makes sense to retain all your accounts. However, if the costs outweigh the benefits, consider closing accounts that provide the least value compared to their expenses.
Frequently Asked Questions (FAQs)
Is it beneficial to distribute funds across multiple banks?
Distributing funds across multiple bank accounts offers several benefits, including simplified transaction tracking, increased transaction limits for UPI, and diversified ATM cash withdrawal opportunities.
Should all accounts be maintained with a single bank?
While consolidating funds in one bank may seem secure, exceeding the deposit limit might leave a portion of funds unprotected in case of a bank failure. Maintaining accounts with different banks can ensure the diversification of benefits provided by each institution.
Can one open multiple savings accounts within the same bank?
Yes, most banks allow individuals to open multiple savings accounts within their institution.
How many bank accounts should I have?
There is no strict limit on the number of bank accounts you should have, but it is recommended to have fewer than four bank accounts per person to ensure manageable financial management.
Should you open multiple accounts with different banks?
It can be beneficial to open accounts with different banks, but it’s advisable to have fewer than four bank accounts to simplify money management.
Should I keep accounts at multiple banks?
Yes, you can keep various accounts, such as savings accounts or Non-Resident Ordinary (NRO) accounts, at multiple banks to diversify your financial holdings and reduce risks.
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