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Banking

3 reasons you should have more than one savings account

Having more than one savings account could help you track goals and have more FDIC coverage.

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Vladimir Vladimirov | E+ | Getty Images

When it comes to savings accounts, sometimes more is better.

With a single savings account, you might have trouble managing all of your goals in one place, or you might be too tempted to spend from that account.

Those problems won't worry you when you have multiple accounts. And while an individual bank or financial institution may limit how many savings accounts you can have with them, there's no limit to how many accounts you can have at different places.

When you look for the right savings account, it's important to consider fees, the annual percentage yield or APY (the amount of interest an account earns in a year), and functionality. Several of CNBC Select's favorite high-yield savings accounts offer high interest rates with minimal fees — Synchrony Bank's High Yield Savings, for example, doesn't require a minimum deposit or balance and has no monthly fees. SoFi's Checking and Savings is another option that ranked highly for its welcome bonus and strong APY with a direct deposit. 

Synchrony Bank High Yield Savings

Synchrony Bank is a Member FDIC.
  • Annual Percentage Yield (APY)

    4.75% APY

  • Minimum balance

    None

  • Monthly fee

    None

  • Maximum transactions

    Up to 6 free withdrawals or transfers per statement cycle

  • Excessive transactions fee

    None

  • Overdraft fee

    None

  • Offer checking account?

    No

  • Offer ATM card?

    Yes

Terms apply.

SoFi Checking and Savings

SoFi Bank, N.A. is a Member FDIC.
  • Annual Percentage Yield (APY)

    Members with direct deposit earn 4.60% APY on savings, no minimum balance needed. Members without direct deposit earn 1.20% APY on savings balances, and everyone earns 0.50% APY on checking balances.

  • Welcome bonus

    Earn a $300 welcome bonus when you direct deposit a total of $5,000 or more within 25 days of your first direct deposit. Get a $50 welcome bonus when you direct deposit between $1,000 and $4,999.99 within 25 days of your first direct deposit.

  • Fees

    No monthly fee and no excessive transaction fees.

  • No-fee overdraft protection

    No-fee Overdraft Coverage up to $50 for SoFi members with $1,000 or more in total monthly direct deposits. Purchases exceeding $50 are declined.

  • Offer ATM card?

    Yes, this account offers a debit card that allows purchases and ATM withdrawals. Terms apply.

  • Offer checking account?

    Yes, bundled with savings account.

  • Maximum transactions

    Up to 6 free withdrawals or transfers per statement cycle. Transaction amount limits apply.

Here's what else you need to know if you're considering opening another savings account, and several scenarios where it might be helpful to have more than one.

You can better visualize and separate different goals

If you're having trouble keeping track of your different savings goals, it may be time to open another savings account. 

"Having multiple savings accounts allows you to visualize certain goals," says Andrea Woroch, a consumer and budgeting expert based in California. "You could create different savings accounts for different goals, and then there's no mudding of your savings." 

Using a separate savings account, or one that allows you to have "buckets" for different goals like Ally Online Savings Account, could help keep your savings more organized. These buckets are all within the same savings account, but can still help you visualize how much progress you've made toward each of your goals.

You'll avoid spending your emergency fund

An emergency fund is a pool of cash saved for unforeseen expenses, such as home repairs or a job loss, and is generally equal to three to six months' worth of your expenses. It's meant to be kept accessible in an emergency. 

If you're often tempted to dip into that emergency fund, it might be time to open another savings account at a bank or financial institution that's separate from your checking account or other accounts that you regularly monitor.

"If it's not at the same bank as your checking account, it's not going to be as easy to dip into," Woroch says. "It's still liquid and you can access it in an emergency, but it just makes it a little harder to touch on a daily basis when you feel a temptation to buy something that you might not be able to cover otherwise." 

By keeping your emergency fund out of sight and out of mind, you may be able to better maintain it for when it's needed, and avoid the temptation to spend it. 

It could help you get more FDIC coverage

Federal Deposit Insurance Corporation (FDIC) coverage is limited to $250,000 per person, per account ownership category, and per insured bank. Having multiple savings accounts across different banks or fintechs is one way to get more than $250,000 in FDIC protection.

Some institutions will help do this work for you, taking deposits and distributing them across several partner banks. Wealthfront uses this model for its Cash Accounts to offer up to $5 million for individual Cash accounts ($10 million for joint accounts) through partner banks. Betterment, another fintech company, offers up to $2 million in coverage for individual Cash Reserve accounts by distributing deposits to partner banks. 

Betterment Cash Reserve

  • Annual Percentage Yield (APY)

    5.00% APY with new customer boost of extra 0.50% APY for 3 months (earn up to 5.50% APY)

  • Minimum balance

    $10 deposit

  • Monthly fee

    None

  • Maximum transactions

    Unlimited withdrawals

  • FDIC insurance coverage

    Up to $2 million

Terms apply.

While this can be useful for those with large savings account balances, you'll need to double-check that the banks the fintech company works with aren't ones where you currently bank. Since you only get $250,000 of FDIC coverage at each institution, any deposits you already have with a bank will count toward that limit. Check your statements to see where your cash is deposited to ensure you'll get the full coverage amount.

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Bottom line

Having multiple savings accounts could help you keep your money covered by FDIC insurance, keep your emergency fund safe from spending, and help you better track your goals. To get the best savings account, consider the APY, functionality of the account, and opt for a fee-free account.

Catch up on CNBC Select's in-depth coverage of credit cardsbanking and money, and follow us on TikTokFacebookInstagram and Twitter to stay up to date.

Information about the Synchrony Bank High Yield Savings Account has been collected independently by CNBC and has not been reviewed or provided by the bank prior to publication.

* SoFi members with direct deposit can earn up to 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum direct deposit amount required to qualify for the 4.60% APY for savings. Members without direct deposit will earn up to 1.20% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of 12/12/23. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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