Can you manage many bank accounts, despite the fact that there is no limit to how many you can have? Some people just have one savings and one checking account, while others have more than a half-dozen. While some people open multiple bank accounts to manage their many sources of income or investments, others do so to take advantage of the numerous benefits offered by these accounts, such as discounts at certain outlets, free cheque books, and so on. Multiple accounts can be accumulated in a variety of methods, including
- If your employer offers you a salary account, use it.
- If you've opened a brokerage account,
- Joint accounts are possible.
- Some banks will only provide you a loan or a credit card if you have an account with them.
- If you own a company, you'll need a business account.
It doesn't matter how many accounts you have or what they're for; it's all about how well you'll be able to manage them without being confused. There are three approaches for dealing with a large number of accounts.
- You can either keep the accounts or close them; however closing an account with a negative balance can hurt your credit score.
- You leave it inactive, however leaving it inactive can result in expensive maintenance bills.
- Alternatively, you can properly handle them.
Thus in this blog we will help in you providing guidance as to how you can manage Multiple Bank Accounts without any hassle. So without any further ado, lets learn!
Multiple Bank Accounts; How to manage them?
Separation of earnings
To begin, you must understand the fundamental notion of "budgeting." You'll know what goes into which account if you can categorize your income and expenses. You can make a list of your expenses, such as savings, fixed, and variable costs. Savings for things like a retirement fund, an emergency fund, a major purchase or travel, and so on.
Fixed expenses include things like rent and utility bills, whereas variable expenses include things like unexpected medical bills, repairs, and travel costs, among other things. You'll know which account to utilize for what once you've divided your costs into these three categories. The simplest method is to have separate accounts for fixed spending, savings, and variable expenses.
Calculate the whole monthly amount for that particular expense, such as what is the total amount of fixed expenses, and then move your funds to that account after you've decided on an account for each category of spending.
You can use the automatic transfers option for certain expenses after you've set up an account for each expense type. You can enable automated transfers and have funds transferred to your savings, pay bills, rent, and variable costs accounts. This way, you'll know exactly how much you're spending on each account and can keep track of your expenditures.
Keep these things in mind:
Though having numerous accounts may appear to make money management easier, there are a few things to keep in mind.
- Account minimum balance - Not all accounts can have a zero balance. Check the account's minimum balance requirement and make sure you meet it to prevent incurring extra fees.
- Fund Transfer Fees - Keep track of the fund transfer fees that are applied to your accounts. As a result, when transferring funds to another account, include these costs and complete the transaction.
- Certain discounts and prizes are available with some bank accounts. Keep an eye on the prizes and take advantage of them.
- Make sure you don't transfer money back and forth from one account to another because fund transfer fees may apply.
- When opening a new bank account, look for features such as limited or unlimited fund transfers and a low or no minimum balance requirement.
- Keep in mind that you should not use the same password for all of your online banking accounts.
The drawbacks of having Multiple Bank Accounts
There are several advantages to having many accounts, such as segregating your goals and budgeting, but it's not a one-size-fits-all technique, and it's absolutely OK if you like to keep things simple.
If you're thinking about opening numerous accounts, keep the following in mind:
- Managing several accounts takes a lot of time.
- Fees for monthly service and a minimum balance
- The risk of overlooking or missing fraudulent behavior, overcharging, or double billing.
The important lesson is that you must be honest with yourself about your ability to handle several accounts because; it requires serious, business-like administration.
According to our Experts, credit scores are exclusively based on information found on a consumer credit report, such as your history of credit cards and loans, therefore opening and closing any type of checking or savings account will have no impact on your credit score.
Certainly, the more accounts you have, the more work you'll have to do to manage them. Though the automatic debit option can make your life easier, it is still necessary to monitor your accounts on a regular basis to ensure that everything goes according to plan. This is also only applicable to those who already have multiple bank accounts. People who just have one or two accounts should avoid opening separate accounts for each spending because this might be a trap if you are unable to manage them. We hope this blog was helpful in providing incite full information in managing Multiple Bank Accounts. For more such information related to Banking and other related aspects of it in Uae, you can check out our website.