Traditionally, most people have just one savings account because they don’t think there’s a need to have more than one account.
But not everyone is a traditionalist. Maybe you’re looking for one of the best savings accounts or you want an account that lets you make an unlimited number of bill payments. Here are a few reasons why you may want to think about opening more than one savings account:
You have different savings goals—If you’re saving for a vacation, a down payment on a home, and trying to build up an emergency fund, it might not make sense to put all of the money for each into a single account. You’ll need to calculate what amount goes toward each goal, which might be complicated. When you have separate accounts, you’ll have a much clearer picture of how close you are towards reaching your goals.
You want to earn a referral bonus—Sometimes it pays to be a customer of certain banks if you refer your friends. For example, Tangerine is offering customers $50 “for every friend you successfully refer who opens their first Tangerine Account with a deposit of $100 or more using your Orange Key.” Your friend will also get $50. Refer as many people as soon as you can because the referral bonus drops back down to $25 after Jan. 31.
You want a sign-up bonus—Since financial institutions want your business, many of them will try to do whatever they can to lure you in as a customer. And you’ll also make a little extra money. For instance, Meridian Credit Union is currently offering $100 to new customers who open a high-interest savings account. But it’s only available online to new Meridian members with a minimum deposit of $1,000. Keep in mind that these kinds of offers are usually only for new customers and you’ll likely only be able to take advantage of them once in a lifetime. Still, it’s a nice way to earn a little extra cash.
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You have a large balance and are afraid your bank will fail—If you have a lot of money sitting in a regular savings account and are afraid your bank might collapse, you can get accounts at different financial institutions that are members of the Canada Deposit Insurance Corporation (CDIC). The CDIC insures deposits at member institutions up to a maximum of $100,000 (principal and interest combined). For example, if you have $475,000 in an account and your bank collapses, only the first $100,000 is protected. But if have five savings accounts at five different CDIC member banks and deposit $95,000 into each account, all $475,000 will be protected. If you bank with a credit union, you might have even more protection. The Deposit Insurance Corporation of Ontario, for example, insures deposits up to $250,000. If the cash is in a registered account, your coverage is unlimited.
You want a better interest rate/account features - Let’s face it, not every financial institution has the best interest rate or has the best account features. Many banks are currently offering a teaser rate of as high as 3% for a limited time while EQ Bank and Wealth One Bank of Canada both offer accounts with no monthly fees, no minimum balance, free bill payments, and a high everyday interest rate. However, EQ Bank’s account also comes with five free Interac e-Transfers a month and its rate of 2.3% is currently higher than Wealth One’s 2%.
The bottom line
It never hurts to have more than one savings account. However, make sure you know what you’re signing up for. Some accounts may only come with one transaction a month or no transaction fees if you carry a large balance whereas others will come with a great rate and no fees whatsoever.