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Spencer Tierney is a consumer banking writer at NerdWallet. He has covered personal finance since 2013, with a focus on certificates of deposit and other banking-related topics. His work has been featured by The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among others. He is based in Berkeley, California.
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Checking and saving accounts go together like bacon and eggs, but both are good separately, too. You don’t need to have all your accounts at the same bank. In fact, you might benefit from splitting them up.
About one-third of people who switched banks recently or wanted to switch had checking and savings accounts at different banks, according to research by bank analytics firm Novantas. And about 11% of bank customers switched banks over the course of a year, based on Accenture’s 2016 North America consumer digital banking survey.
Here’s why it makes sense to scatter your money.
1. Maximize your returns
It’s possible to find a bank account with a decent interest rate despite the national averages— 0.06% annual percentage yield for regular savings accounts and even lower for interest checking, according to the Federal Deposit Insurance Corp. But some online-only banks offer checking rates higher than 0.50% and savings rates north of 1% APY.
You might reach savings goals faster with a high-yield account. Having $10,000 in one with a 1% rate earns you $100 in a year, compared with $6 at the national rate.
4.60%SoFi members with Direct Deposit or $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 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 stated interest rate. Members without either Direct Deposit or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.20% 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 10/24/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
These cash accounts combine services and features similar to checking, savings and/or investment accounts in one product. Cash management accounts are typically offered by non-bank financial institutions.
These cash accounts combine services and features similar to checking, savings and/or investment accounts in one product. Cash management accounts are typically offered by non-bank financial institutions.
5.50%*Base annual percentage yield (variable) is 4.75% as of 7/31/23. 5.50% APY reflects a .75% boost available as a special offer with qualifying deposit. Terms apply. Cash Reserve is only available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are conducted through clients’ brokerage accounts at Betterment Securities.
Min. balance for APY
$0
CDs (certificates of deposit) are a type of savings account with a fixed rate and term, and usually have higher interest rates than regular savings accounts.
CDs (certificates of deposit) are a type of savings account with a fixed rate and term, and usually have higher interest rates than regular savings accounts.
5.55%All Bread Savings APYs are accurate as of 11/30/2023. APYs are subject to change at any time without notice. Offers apply to personal accounts only. Fees may reduce earnings. To open a CD, a minimum of $1,500 is required and must be deposited in a single transaction. A penalty will be imposed for early withdrawals on CDs. At maturity, your CD will automatically renew and earn the base interest rate in effect at that time.
0.50%SoFi members with Direct Deposit or $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 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 stated interest rate. Members without either Direct Deposit or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.20% 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 10/24/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
Some banks offer sign-up bonuses, and credit unions tend to charge lower fees than banks do. Other banks and brokerages don’t charge foreign transaction fees.
Ahmed Bhuiyan, a Seattle-based travel industry consultant, switches between his banks when on the road. He likes one bank’s domestic ATM network but uses a checking account at another bank to avoid foreign transaction and ATM fees.
3. Maintain financial flexibility
Certain bank features make it hard to move your money elsewhere, such as direct deposit and recurring bill payments — so you might end up sticking with a bank you don’t love. To avoid that, consider splitting your direct deposit between checking accounts at two different banks or using alternatives to recurring payments, such as calendar reminders or apps.
Watch out for pitfalls
Money transfers between banks can take two to three business days, and it can be hard to keep track of the bills you pay with different accounts. If you’re not careful, you might overdraw an account.
It’s important to keep all of your accounts fully funded and know where direct deposits go and how to avoid fees on each, says Alicia Butera, certified financial planner at Planning Within Reach in San Diego.
Some financial institutions and third-party budgeting apps make this easier by linking various accounts, so you can see all your money at once.
"Thank God for apps like Mint," Bhuiyan says. "If this were the ’90s, I might not have all these accounts."
