Why you need more than one bank account

Having one bank account isn’t just risky, it could be costing you cash.

Lots of people only have one current account. And they’ve had it for a long time. They might even switch it to a new bank to get free cash or another benefit. 

But limiting yourself to a single account – whether through loyalty, indifference or simply not knowing you can have more – is a bad idea.

And opening up new accounts can bring benefits when managing and accessing your money – and even making some extra cash.

Keep reading or watch this video to see why I think you should have more than one account. 

Can you have more than one current account?

Let’s get this cleared up first. Even though many think they can only have one, there’s actually no limit to how many you can open from different banks. You might even be able to have more than one from the same institution.

As I’ve written about previously I’ve got 14 current accounts (it’s actually up to 15 now), and most of you won’t need anything near that many. In fact even just having two can be enough.

And there’s very little risk in opening and running multiple accounts. I’ve shared a few things to consider further down the article.

8 reasons to have more than one current account

Here are the main reasons I think you should open up extra accounts.

If your bank has technical issues

We rely so much on online and app banking nowadays that not having access for even a few hours can be much more than an inconvenience.

The TSB debacle a few years ago saw people unable to access their wages or pay their rent. Though the length of time the TSB systems were down has been an isolated incident, occurrences of website crashes and app downtime for hours are increasingly frequent.

Sometimes the problems aren’t even related to the bank. There have been problems too with the intermediatory payment processors hitting banks, most recently the Wirecard collapse hit customers of Anna Money, Pockit and Curve in 2020.

And the risk of this happening to your bank is the number one reason why I think you should have at least two current accounts. In this second account put enough money in there that you can cover essentials for a few days. If you can put more, then even better.

Make sure that this second account isn’t part of the same group as these tend to share technical systems. So If you’ve got a Halifax account, make sure the second isn’t Lloyds, and visa versa. And the same for Natwest/RBS. I think First Direct and HSBC have different systems but it’s can’t hurt to do the same.

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 didn’t 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, you’re 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 Nationwide’s FlexDirect, and 2.02% on up to £1,000 with Virgin Money.

These are far higher than you’ll get anywhere else for cash savings right now. Again, this could easily be one of your two accounts alongside the cashback account. I’ve 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.

To manage your money with someone else

Every couple manages their money differently. Some only have their own accounts and that can work fine. We have a couple of joint accounts that we pay money into each month. One is our cashback account for all the bills, while the other two are TSBs for joint savings. 

You need to have a chat with your partner about what works best for you, and it could be a joint account is a bad idea – especially since it will link you on things like your credit report.

For help with budgeting

I think it’s 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. Here’s more on these features and these banks.

To make some money

If you only want a maximum of two bank accounts a really good option is to make sure one of them is going to be making you money.

The best is probably a cashback current account from Santander. You pay a small monthly fee but in return you’ll get cashback on your bills. Unless you don’t pay things like Council Tax, energy or broadband bills then you will make money.

There are two options – the Santander 123 and the Santander 123 Lite. You can read more about the differences in my comparison of the accounts.

To keep switching

I’ve made a lot of cash by switching from bank to bank and nabbing incentive bonuses each time. Now some people struggle with the idea of switching once, let alone repeatedly, and in part that’s because they like the bank they are with.

Well you can get around this by having a separate account that you just use for switching. The offers come and go (there have been none during lockdown), but there’s no harm having an account ready for if/when offers appear.

If you need to go into a branch

I’d also make sure one of your accounts – and again this can work if you only have two accounts – has a branch that you can physically walk into if you need to. 

Though I rarely need to go into a branch these days, there are times I do. In the last year I’ve had to take out a large amount of cash, sign forms and pay in cheques (though as I wrote recently some banks allow you do to this via the app). And only a few years ago I popped into a Halifax after there were some fraudulent transactions on my card.

Yes you can cover a lot of this online or over the phone, but I like the option to go into a branch if I feel the need. And if you’ve multiple accounts it’s easy enough to make sure one of those is local.

Andy’s YouTube

Watch new videos every week on the Andy Clever Cash channel, plus a regular live Q&A

For fee-free overseas spending

A final one to add to your wallet is an account with Starling, Virgin Money or Monzo as all offer fee-free spending abroad.

Though these have some great budgeting features (as I covered on the podcast recently), I’ve not used them for this, so I actually just keep them in a separate holiday wallet, alongside my specialist travel credit cards. When it’s time to leave the UK I bring them all with me.

Multiple current accounts and your credit score

Before applying for a new account, make sure your credit report is up to date and there aren’t any obvious warning signs. This is because you will be credit checked each time you open an account (except with Monzo or Starling).

It’s worth spacing the applications out rather than doing them all at once. And if you’re thinking of applying for a mortgage in the next six months it’s wise to just hold off until that has gone through. But the risk is minimal.

I’ve written more about how bank switching impacts credit scores here.

Opening up additional current accounts

It’s very easy. You simply pick which account you want to open and go through the application process. You’ll 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. You’ll probably need to upload photos of ID.

Others might require you to visit a branch with ID to complete the process. I can’t say which ones will and won’t ask for this, but this happened for my Natwest and Barclays applications.

I’ve heard First Direct is requiring certification of documents, which means you’ll need someone like a solicitor, account and, doctor or pharmacist to verify you are who you say you are.

Andy’s podcast

Listen to Cash Chats, Andy’s twice-weekly podcast. Episodes every Tuesday and Friday.

How to manage multiple current accounts

Some benefits that come with additional accounts require things like additional direct debits or minimum payments in every month. But there are tricks to manage this.

You might also struggle to keep tabs of your many accounts, but there are apps like Yolt and Money Dashboard which aggregate all your balances onto one screen which are really useful to keep track. Password managers such as Last Pass also allow you to safely store all those different passwords and usernames.

And those only really become issues if you are having lots of accounts. If we’re talking about opening just two, three or maybe four accounts you shouldn’t have any problems.

The best additional current accounts for you

The right accounts for you really depend on your situation and change regularly. For me, if I was only to have a handful of accounts, I’d probably want a minimum of three, and I’d go for the following:

Top three current accounts

I’ve shared my top accounts in more detail, but in summary:

EVERYDAY BANKING: Starling Bank

It’s an easy app to use for day-to-day banking, and it’s regarded as one of the most ethical (Tiodos and Natiowide do better). There’s also the bonus that I can use it fee-free abroad. Review

2. SAVINGS: Virgin Money

The 2.02% interest for the first year isn’t great, but it also can’t be beaten. Review

3. SWITCHING: TSB

You can get paid to open a TSB Spend & Save account via Quidco. It’s not a great account but you can then use it to switch for bonuses from other banks again and again. Review.

Further accounts to consider

If you feel you can manage more, then it’s 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. It’s 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.

Of course, these offers and accounts can change, so do read more about the latest benefits of all these and other accounts on this regularly updated page.

7 thoughts on “Why you need more than one bank account

  1. I had to pull up Personal Capital and count them. Looks like I have nine bank accounts, all with significant amounts of deposits. Needless to say I share your views that it is good to have more than one.

  2. Andy -TSB are now paying only 1.5%

    1. Oops, must have missed that in the update! Thanks Brian

  3. Wow always a plus to here about those banking/financial points. Wake up call for me as I only hold one bank account so in the event of a banking computer crash I will in big troubles. Was very very very usefull many thanks.

  4. Great article. And you’re right to point out that tracking multiple accounts has gotten even easier with ‘open banking’ and the invention of multiple account tracking apps like Yolt. They allow you to reap the benefits of multiple accounts without the drawback of having to login to each and every one to keep on top of your savings.

  5. One further reason for having at least two current accounts is the possibility of your bank “freezing” your main account .There are many stories of this happening to innocent people who have been unable to carry out ANY transactions until the matter is resolved.A second account makes it fairly straightforward to have income payments received and payments out to be made

    1. Good thought!

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