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. 

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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 a number of current accounts (it’s actually up to 18 now), but 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 at a number of banks.

Sometimes the problems aren’t even related to the bank. There have been problems too with the intermediatory payment processors hitting banks (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 or overdraft

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.

You could of course put this cash in a normal savings account, but the best rates right now are in a handful of current accounts – and you’ll find it easier to access the cash.

You can get 5% 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. 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. But joint accounts are particularly good for join expenses.

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, though third party apps are other options. 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.

But there are plenty more accounts offering freebies or money each month, and the more of these you have the more you’ll get.

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 try to ensure 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 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.

For fee-free overseas spending

A final one to add to your wallet is an account with Chase, Starling, Virgin Money or Monzo as all offer fee-free spending abroad. Here’s more in guide to specialist travel cards.

Andy’s Top Current Accounts

  • Starling Bank for everyday banking (review)
  • Chase Bank for cashback on spending (review)
  • Santander 123 Lite for cashback on bills (review)
  • Halifax Rewards for free cash every month (review)
  • Nationwide FlexDirect for 5% interest on saving (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 aren’t any obvious warning signs. This is because you will be credit checked each time you open an account (except with Monzo, Chase 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.

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.

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

  1. Given the current situation in the world economy,how likely is it that banks could collapse and renegade on the financial guarantee of £85000 ?

    1. It’s a government protection so that would have to be a massive collapse!

  2. 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.

  3. Andy -TSB are now paying only 1.5%

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

  4. 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.

  5. 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.

  6. 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!

    2. Yeah this happened to me years ago. all my money was in the Post office bank and they went on strike. It was a disaster. I phoned them up and asked, couldn’t they make an exception, it was all the money I had and I couldn’t eat, and they said no. I cried. It had no effect. Bastards.

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