Open A Savings Account
If you are successfully about to save an adequate amount every month, I recommend that you consider opening additional accounts to move on to better interest rates. A dedicated savings account offers a higher interest rate at the expense of liquidity. You will need to maintain a minimum required balance in the account and should not make withdrawals from the savings account.
The best type of savings accounts include accounts that are covered by the FDIC. The FDIC is a federal deposit insurance corporation that insures your bank investments of up to $250,000. Generally, you can earn an interest rate on these types of savings accounts.
The terms of the savings accounts are different for each bank. Generally, the deposit cannot be withdrawn through regular checks or ATM withdrawals. However, some banks do offer a withdrawal facility but charge a penalty for each transaction.
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Plus, if you have Aspirations fee-free, no interest Spend and Save plan, youll be eligible for a $150 welcome bonus if you spend $1,000 in the first 60 days. Bump that up to a $200 welcome bonus if you spend $1,000 in the first 60 days and you have .
Youll get all of these perks for just $7.99/month with the Plus plan , or you can pay no monthly fee with .
Add A Savings Account
A savings account is an essential component of a sound financial strategy.
While many checking accounts dont earn interest, savings accounts do, and they let your money work for you while you go about living your life. You may choose a savings account at the same bank as your primary checking account or explore the many popular online savings accounts available. Online savings accounts often offer substantially higher interest rates than accounts offered by brick-and-mortar banks, making them a wise choice to boost your savings.
You may choose to have more than one savings account for just this reasonto make it easy to move your money from a lower-interest account to one with a higher yield. Yet, as you explore an additional savings account to take advantage of the higher yields offered by online banks, dont forget about the drawbacks.
Many online banks have a funds delay, meaning moving money between banks wont be immediate. Transferring funds between online savings accounts at another bank and your primary checking account can take a few days. Youll likely want to keep your emergency savings in a savings account with a low transfer delay to your primary checking account. You can then use your secondary savings account for cash reserves above and beyond your rainy day threshold.
The Business Checking Account
Ive been self-employed for almost 10 years. All my income first hits my business checking account.
It makes sense to have a business checking account if you earn any kind of self-employment income. It doesnt matter if its from running your own business or just some occasional freelance work. For a sole-proprietorship or single-member LLC, keeping your business receipts and expenses in a separate account isnt necessary, but its good financial hygiene. It makes taxes easier. And if you have an LLC, it helps preserve the liability protection that business structure gives you.
Each month, I look at my business profits. Of course, I set some aside to reinvest in the business. The rest I sweep into either my reserve savings account or directly to investment accounts.
Opening a business checking account has gotten easier in the past few years thanks to a few banks that make it easy to open an account entirely online. provides free everyday business banking and pays 0.6% APY on balances up to $100,000. I also like the , which pays 1% cash back on certain debit card purchases.
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Keep Your Money Insured
One of the things that makes a savings account one of the best places to store extra cash is insurance from the Federal Deposit Insurance Corporation . The FDIC offers up to $250,000 in insurance, per depositor, per account type, at covered banks. If the amount of money youve deposited exceeds that amount, any money over and above the $250,000 limit could be at risk if your bank fails.
If youre fortunate enough to have more than $250,000 to put in your bank accounts, splitting your balance between savings accounts at different banks keeps your money safe.
For instance, if you have $300,000 in a savings account at one bank, $50,000 of your balance isnt protected. If you instead put $150,000 into savings accounts at two different banks, your full balance will be insured.
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And Two Become One: How To Combine Bank Accounts
5 Min Read | Sep 27, 2021
Dearly beloved, we are gathered here today to honor one of lifes greatest moments, to give recognition to the worth and beauty of loveand to say, hey, if you plan on lasting til death do you part, as soon as this wedding . . . er, article . . . is over, you and your spouse might want to hightail it straight to the bank and combine those accounts.
Combine accounts? That might make you wince. People have strong opinions on whether spouses should share bank accounts. If you and your spouse already share, then youve probably seen what a blessing thats been to your marriage.
But if youre getting married and still deciding what to do, or if youre married and maintain separate accounts, keep reading.
Related: Need a way to manage your combined accounts? Check out our free budget app EveryDollar!
First, though, keep this in mind: If youredating or engaged, now is not the time to combine. Yes, you may love each other. The wedding date may be set. But too many engaged couples have split before the big day. And if theyve already combined their money, thats one big mess to clean up.
As soon as the preacher says, And now you are one, combining your finances is one of the first things you should do. Then you and your spouse can manage your money together.
Why Would I Have More Than One Account
There are a few reasons why having more than one account might be useful:
Trying out a new account: In recent years the industry has become a lot more competitive, and each bank offers something different. Using other banks to try out a different bank account can help you see whether the products, services or features of another account suit you. Overdraft limits, for example, differ from bank to bank and therefore might suit different people. Having an arranged overdraft with one bank, however, should not automatically disqualify you from getting one with another.
Youâve found another provider you prefer: Whether the app’s easier to use, they’re providing a good interest rate on a savings account, or the bank has a branch near you, you might have shopped around and found a new account you like.
Taking advantage of offers: Many banks offer cash back or short-term deals to encourage you to switch, so you can make a bit of cash when you open a new account.
Earning interest: Some banks pay interest on the money you have in your current account. But many have a maximum balance that they pay interest on. Savings accounts and ISAs can earn you interest too but this is often at a much lower interest rate than the rate offered on current accounts. Some savers open multiple high-interest current accounts to get the most out of their money.
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Get Access To Funds In Case Of Failure
Even if you have less than $250,000, it is advised you invest your savings into different savings accounts. Suppose you have $100,000 and invest all of it into a single online investment bank. If that institute goes under for some reason, it would still take time for you to get access to funds through FDIC.
Dividing your investment into multiple savings accounts ensures that you will always have access to some funds to meet your needs.
To Separate Your Savings
When I was younger I was guilty of just having all my money in one account savings and spending. Which meant that I didnt ever really know how much I had in savings, and it was possible to accidentally dip into those funds with everyday spending.
The answer to avoid this is to open up a separate account and move all your savings over. Then set up a standing order to regularly move more money each month.
Why not use an actual savings account or ISA instead? Well apart from the fact it means you can access the funds if something goes wrong with your main account, youre also likely to get better interest rates in one.
Though those rates have dropped a lot in the last couple of years, you can still get 2% for one year on up to £1,500 with Nationwides FlexDirect, and 2.02% on up to £1,000 with Virgin Money.
These are far higher than youll get anywhere else for cash savings right now. Again, this could easily be one of your two accounts alongside the cashback account. Ive written more about the best place for savings here.
This trick also works if you have a huge overdraft, as keeping that debt away from regular spending will help you keep track as you pay it off.
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For Help With Budgeting
I think its worth having a separate account too for your everyday spending. Ultimately this will help you keep track of where your cash is going, and there are certain accounts that make this a lot easier.
Monzo and Starling are both really good banks for this. Heres more on these features and these banks.
Opening Up Additional Current Accounts
Its very easy. You simply pick which account you want to open and go through the application process. Youll enter details about your address history and income, and share ID such as your passport or driving licence.
Some accounts will let you do this completely online, and will absolutely be the case for digital only banks such as Monzo, Starling and Virgin Money. Youll probably need to upload photos of ID.
Others might require you to visit a branch with ID to complete the process. I cant say which ones will and wont ask for this, but this happened for my Natwest and Barclays applications.
Ive heard First Direct is requiring certification of documents, which means youll need someone like a solicitor, account and, doctor or pharmacist to verify you are who you say you are.
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Will The Fdic Deposit Insurance Apply To All Of My Savings Accounts
Your deposits of up to $250,000 are protected as long as theyre held in a bank or other financial institution insured by the FDIC. If your balance across accounts held at one institution exceed $250,000, youre protected for $250,000 only.
To maximize the FDICs insurance, consider depositing your funds at another institution after you hit the $250,000 limit. Also, because limits are per account holder, you can put one of your accounts in your spouses or another beneficiarys name to insure your balances beyond the limit.
What To Consider Before Opening A Bank Account
Before opening an account, consider the following:
- how you’ll use the account, for saving or making payments
- charges or fees on the account
- interest you’ll earn on the money in your account
- if your deposits are protected by deposit insurance in case your financial institution fails
Make sure you understand all the terms, conditions and fees of the account before you sign up. Ask questions about anything that you dont understand. Keep a copy of your account agreement for your records.
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Further Accounts To Consider
If you feel you can manage more, then its time to look at reward accounts. You could easily have half a dozen of these, but my top two are:
CASHBACK: Santander 123 Lite
Pay all your bills from here to generate a few extra pounds every month. Its a good option for a joint account too. Review
REWARDS: Halifax Rewards
Of all the reward accounts the £5 a month is the best. Review.
Multiple Current Accounts And Your Credit Score
Before applying for a new account, make sure your credit report is up to date and there arent any obvious warning signs. This is because you will be credit checked each time you open an account .
Its worth spacing the applications out rather than doing them all at once. And if youre thinking of applying for a mortgage in the next six months its wise to just hold off until that has gone through. But the risk is minimal.
Ive written more about how bank switching impacts credit scores here.
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How Many Checking Accounts Can I Have
The number of checking accounts any one person can have is entirely up to them. Theres no limit on the number of checking accounts you can open, whether you have them at traditional banks, credit unions or online banks.
There is, however, a limit on how much of the money you keep in your checking account is FDIC insured. The Federal Deposit Insurance Corporation insures banking deposits, including money held in checking accounts, up to specific limits.
The standard FDIC coverage amount is $250,000 per depositor, per FDIC-insured bank, for each account ownership category. So this means if you have multiple checking accounts at the same bank, along with savings accounts, money market accounts or CD accounts, your total coverage amount is $250,000 across all of them.
The good news is that the $250,000 per depositor limit applies to individual banks. So youd be insured up to those limits at each bank that you have a checking account.
Benefits Of Multiple Bank Accounts
Your money can potentially work harder for you by using a combination of accounts. Here are some of the benefits multiple accounts can bring to your finances:
- Higher interest rates. Brick-and-mortar banking customers can tap into the higher interest rates offered by online savings accounts. Everyday checking account users can get a boost by switching to a cash management account at an online bank.
- Dedicated savings accounts. You can keep your savings goals on track with automated savings from your checking account to the savings account of your choice, earning the most interest for your money as possible each month.
- Enhanced liquidity. While interest-bearing accounts like money market and savings accounts may charge fees when you make more than a set number of withdrawals per month, an online checking account or cash management account can help you earn interest and have constant access to your funds.
When adding additional bank accounts to your financial mix, look for the highest possible interest rate while taking note of minimum balances and monthly fees. Add accounts that further your savings goals, and be mindful of what it takes to add or change an account, including new debit card numbers and automatic payments youll need to switch over.
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You Need Photo Id To Open A Bank Account
Showing ID could mean showing a tenancy agreement with a recent utility bill instead, for example.
Most banks will give you a list of the documents they will accept. Go and talk to the bank you wish to open an account with they should be able to provide you with a list of alternative documents you can give instead.
Its probably worth noting that using a non-photo ID usually also requires you to go into the branch and may not be accepted on postal applications.
Just want a very simple bank account? a basic bank account could be right for you
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