The bare minimum number of bank accounts you should have is one chequing account and one savings account. You can scale up from there and add accounts for specific purposes or projects, such as short-term and long-term savings.
While there may not be a perfect number, there are steps you can take to determine how many bank accounts you should have. Here’s a rundown of different strategies to consider so you can make the right decision for you.
Key Takeaways
- At a minimum, you should have a chequing and savings account.
- To separate your wants and needs and save for specific goals, open 2 chequing accounts and 2 savings accounts.
- Additional accounts can be on an as-needed basis. For instance, if you wanted to open a joint account or a youth account for your child.
- Think about fees, intended use, insurance, promos, and how many accounts you can juggle before deciding how many accounts to have.
Strategies for how many bank accounts you should have
There’s no specific number of bank accounts that works for everyone. You may only need 2 or 3, whereas someone else may need more.
To begin, let’s consider the bare minimum, and from there, you can increase the number of accounts you need according to your personal circumstances.
The bare minimum: 1 chequing and 1 savings account
For the majority of Canadians, we recommend that you start with at least 2 accounts: a chequing account and a savings account. And out of both of them, the first one you should get is a chequing account.
A chequing account lets you receive your paycheque, use a debit card to make your everyday purchases, and send or receive cash transfers.
When choosing your chequing account, pick one with benefits such as:
- User-friendly mobile banking app
- No monthly fees or an easy to reach minimum balance
- Unlimited transactions
- Ability to deposit cheques using your phone
The next account you should get is a savings account. This will make it easy to separate funds for everyday use from those that you want to save for a rainy day. Also, the majority of chequing accounts don’t earn any interest, so keeping money in a savings account helps protect the purchasing power of your cash.
While you may choose to use a savings account from the same bank as your chequing account, it pays to look at what else is available. For example, online-only banks tend to offer much higher interest rates than brick and mortar banks.
Goal-oriented: At least 2 chequing accounts, and 2 savings accounts
Once you have a good chequing and savings account, you should consider getting one more of each. Doing so lets you separate your accounts by purpose.
- A second chequing account lets you keep one account for your essential needs, and another one for your wants. Not only does this let you prioritize what needs to be bought and help you stick with your budget, but it also frees you to spend your discretionary funds without guilt.
- A second savings account lets you separate your funds into 2 categories: long-term and short-term savings. Certain savings accounts are better geared for long-term savings, and provide you with perks aimed toward that goal. A short-term savings account could be used to save for your annual vacation, a home renovation project, a car, or another large purchase.
- Additionally, it’s also a smart idea to open a savings account that can hold investments, specifically for your retirement, such as an RRSP or TFSA.
For example, you might have the Scotiabank Basic Bank Account, which offers only 12 free transactions each month – an excellent choice if you want to ensure you don't overspend on the fun stuff. You only have to be 16 to open it too, which makes it a good starter account for teens, and the low transaction limit can mean it's a useful account choice for seniors too.
But 12 transactions isn't much, so you might also open a Scotiabank Ultimate Package and take advantage of the unlimited transactions to pay recurring household bills, buy groceries, etc.
Specific projects: Open additional accounts
Opening additional bank accounts doesn't hurt your credit score, so there’s no need to worry about having multiple accounts. In fact, opening accounts for specific projects or circumstances could give you exactly what you need.
- A youth account can help teach your child about financial literacy
- A U.S. dollar account can help you save on conversion fees
- A joint account can help you and your partner easily pay bills
All of these bank accounts offer benefits and features related to a specific purpose.
How to decide how many bank accounts you should have
It may seem a lot easier to just have a single bank account to worry about, but it makes it a lot harder to keep your funds separate and optimize your savings.
Here are some factors to keep in mind when determining your magic number of accounts:
- Fees: Many chequing accounts charge a monthly fee or require you to keep a minimum balance to waive the fee. You may also incur additional bank fees for transactions. Knowing your budget for fees can help you decide if another account is worth the cost.
- Separation of funds: Do you have bills to pay and savings goals? Would it make sense to keep these funds separate? For example, using an unlimited chequing account for everyday transactions and a high interest savings account as an emergency fund?
- Intended use: Are you looking for a particular kind of account? One with tax benefits, to save for retirement, or perhaps to combine funds with your spouse? There are accounts made for these purposes.
- CDIC-insurance: At CDIC-member institutions, your deposits are covered up to $100,000. To guarantee protection of funds, you may need to open an account in a different deposit category or at another institution.
- Promotions: Shopping around for welcome bonuses, offers, or interest rates can help you score a better deal and earn more.
- Money management: While having multiple accounts for different purposes can be useful, think about how many accounts you can realistically manage.
- Perks: You may find that your current account doesn’t offer you enough transactions or freebies, such as personalized cheques, encouraging you to shop around for better options.
Pros of having multiple bank accounts
To summarize, here are some of the main reasons why it’s beneficial to have more than one bank account.
- It makes it easier to separate funds for wants and needs
- It can help you get more bank bonuses and perks
- It can help you track separate savings goals
- It can serve a specific purpose, such as holding U.S. funds or sharing finances
Cons of having multiple bank accounts
Here are some of the main downsides of having multiple bank accounts.
- The more accounts you have to deal with, the more difficult it gets to keep track of your cash
- Easier to miss fraudulent activity
- Spreading funds into different accounts could lower your earning potential
- More potential fees
- More bank login information to remember
How many accounts do you have?
There are many reasons why it’s a good idea to have at least one chequing account and one savings account. But how many should you open? That’s a question only you can answer. But hopefully you now have a better idea why it makes sense to look into the matter more and question the purpose of your own accounts.
How many bank accounts do you have? Are you considering more and if so, for what purpose? Leave us a comment below!
FAQ
Is 4 bank accounts too many?
There are no specific rules as to how many bank accounts you should have. The total number depends on your needs, and how comfortable you are with handling several accounts at once.
Does opening a bank account in Canada affect your credit score?
Unless the account was part of a package that also included a credit card, or some product that requires a hard credit check, the answer is no. Bank accounts don’t require a hard credit check, so they won’t affect your credit score.
Is there a maximum amount of bank accounts I can have in Canada?
There’s no maximum number of accounts you can have, but it’s important to think about how many accounts you can manage, fees, insurance coverage on your deposits, intended use, and more.
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