Opening a savings account is the most important part of your finances. All the financial management you apply in your day to day life is to increase your savings and maintain enough bank balance that could last through all the good and bad times in your life. Every person in the modern century is saving either through formal methods like, open a savings account in a bank or informally, but it is rare to find someone who does not hold at least one savings account online or offline. In fact, the recent trend tells us that most people are opting for multiple savings accounts. Now, the most frequently asked question in this context is if having multiple savings accounts is a good idea.
There are both pros and cons if you open multiple savings accounts, today we are going to discuss all of them to evaluate if it is a sustainable plan for your future: –
Also Read: Top Zero Balance Savings Account in India
There are both pros and cons of having multiple savings accounts, today we are going to discuss all of them to evaluate if is a sustainable plan for your future: –
Different accounts for different goals:
If you open multiple savings accounts, you have the flexibility of using those accounts for different purposes. Let’s assume you have three accounts, you can use one account to maintain your regular expenses, one account that you can use to pay for insurance, or EMIS, etc. and one account that can cover for emergencies.
Diversity is an integral part of your financial planning; it always helps you tackle financial problems during emergencies. Similarly, if you open multiple savings accounts and the bank is going through financial turmoil, you have other bank accounts to fall back on.
Perks of deposit insurance:
If you open multiple savings accounts, you can enjoy the perks of having a bank deposit insurance as every customer is covered by Deposit insurance and credit guarantee corporation (DICGC) for deposits up to INR 5 lakhs per entity.
Rescue from bank failure:
In these dense times when the market is on a low, and the shares are on a falling streak, it is very important that you have diversification in your open savings accounts. This will help you restore your financial stability even in a case where your bank is facing a failure risk
More loan and credit card offer:
If you open a savings account in multiple banks, it means you have good banking relations with different banks so you will obviously be offered more loans and credit cards than people with a single bank account.
In recent times several banks have enforced a quota of in-branch transactions in all locations. Banks have also started to charge high amounts for in-branch transactions over assigned quota. So, if you open multiple savings accounts you can make frequent branch visits to keep a tab on your hard-earned money
Minimum bank balance:
If you open multiple savings accounts, you are also paying a lot to maintain a minimum balance in all your bank accounts, although that money is safe inside your account, it also liquid cash which is locked unnecessarily in your bank account in pursuit of maintaining minimum bank balance
Pay extra for services:
All banks have some charges associated with the respective bank account or services like a debit card. Now, the more accounts you hold the more money you’ll have to pay for such services and at the end of the day if the interest earned on all your savings account is less than the amount you pay for your services then you are losing money over time.
Filing ITR will become a hectic job:
Your bank is supposed to deduct tax on the interest they pay you on your deposits when the interest paid crosses a particular limit, you attain eligibility for a tax refund, you can claim this at the time of filing your ITR. Now, if you have multiple bank accounts you are sure to get lost in the numbers game, it can become a very complicated math problem to solve.
Holding and handling are two different aspects:
Anybody with a lot of money can have as many bank accounts as he/she likes, but that doesn’t mean that the person is very good at handling them as well. If you are not good with money there is a chance that you may end up missing payments in spite having the money to pay for it because you didn’t take notice of a few accounts which could cover for you
Added complications in ITR:
When you will be preparing for a tax return you will also have to submit information of your bank account, if you have multiple bank accounts you will have to collect individual information about all of them which again, will become a hectic task at a time when you are already busy with a lot of paperwork
Also Read: How to File ITR Online?
Having multiple bank accounts can turn good or bad depending on how much you earn and how good you are with your money. Your financial management skills will come to play because there is no one better than you to decide where your money should be…
Also Read: Top 10 Savings Account in India
Spend your money wisely and keep coming back to CreditKaro blogs for more such interesting content. Until then…happy buying!