Can I open multiple savings accounts with the same bank?

If you’re saving towards multiple goals, you might find it hard to keep track of all of them in a single savings account. One way to organize your goals is to open a savings account for each of them.

Most banks and credit unions allow you to open more than one savings accounts, providing an effective way to streamline your finances with easy access among them. However, you’ll want to carefully read the terms and conditions of your accounts to avoid surprises down the road.

What are the benefits of having multiple savings accounts?

• Easy goal management. Multiple accounts can help you better organize your plans of saving toward more than one goal — for instance, an account for your next vacation, one for an emergency fund and another to help pay for your kids’ education.
• Prioritization. When you only have one savings account, you might end up prioritizing just one of your savings goals. All your hard-earned cash goes into one account for one goal, which means you may not be putting any money aside to achieve your other financial goals.
• Recurring withdrawals. Most savings accounts limit your number of free transactions to just a few per month. With multiple accounts in your name, you can withdraw money from each account without exceeding limits, which is a more effective way to pay for recurring bills or unexpected expenses.
• Features. Savings accounts offer perks that vary by account type. In addition to an everyday savings account for monthly bills, you could open an account for a Guaranteed Investment Certificate (GIC) to lock away money over a period of time with higher interest than you might normally earn with an ordinary savings account.

What are the disadvantages of having multiple savings accounts?

Whether you stick with the same bank or open accounts across institutions, potential drawbacks include:

• It can get confusing. Multiple accounts can help simplify your savings, but they can also make financial tracking and accounting much more complex if you have too many. Make sure you can handle this approach before adopting it.
• Minimum balance requirements. If you spread your funds across multiple accounts, you might struggle to meet the minimum monthly balances for a few of them. Similarly, if you open an account that offers tiered interest — a higher interest rate on higher balances — you could miss out on the maximum available rate because your funds are divided up.
• Extra fees. More bank accounts can result in more fees if you’re not careful to open accounts with fees that you can collectively manage. Mounting costs can quickly eat into your savings.

How many savings accounts do I need?

It all depends on your financial circumstances and goals. Multiple accounts can make balancing several short-term and long-term savings goals easier. If you receive income from multiple sources, you may find it easier to transfer payments from each source into separate accounts to save toward specific goals.

But if you’re organized, able to prioritize goals and have no problem keeping track of your money, one savings account could be all you need.

Will the CDIC deposit insurance apply to all of my savings accounts?

Your deposits of up to $100,000 are protected as long as they’re held in a bank or other financial institution insured by the Canada Deposit Insurance Corporation (CDIC). If your balance across accounts held at a single institution exceeds $100,000, you’re still only protected for $100,000.

To maximize the CDIC’s insurance, consider depositing your funds at another institution after you hit the $100,000 limit. This way, you get multiple increments of $100,000 insurance coverage on your savings. Also, because limits are per account holder, you can put one of your accounts in your spouse’s, or another beneficiary’s, name to insure your balances never go beyond the limit.

Learn about FDIC deposit insurance and how you can increase your coverage.

Can I stack new account signup bonuses?

Banks and financial institutions often offer incentives — gifts, higher interest rates or other bonuses — to stand out from competitors, though nearly always with conditions or restrictions.

For instance, most banks allow only one bonus offer per person, and current customers are typically excluded. Which means if you’ve already got an account with a bank, opening another to get that bank’s bonus offer typically won’t work.

Many financial institutions also limit how many accounts of one type you’re able to sign up for. For example, you may be allowed only one high-interest savings account.

Bottom line

The number of accounts you have doesn’t change the fact that you’re saving, but it does affect how much you’re earning through your savings. Opening multiple accounts can be a way to streamline and organize your goals, but it can also cut down on the power of compound interest. When deciding whether to have one savings account or several, carefully compare interest rates, fees and features to find the best balance between staying organized, protecting your savings and giving your money the best chance to grow.

Did you know that if you open a savings account with an online bank rather than a traditional bank, you will usually get a higher interest rate? Find out why, and compare online savings accounts here.