How Many Savings Accounts Should I Have and Why?

If you’re anything like the average person, you might be behind with your savings goals. Fifty-one percent of Americans haven’t set aside enough emergency savings to last them for more than three months and just 36% feel on track with their retirement fund. If you’ve decided enough is enough and it’s time to make personal finance a priority, one of the questions you may have is, “How many savings accounts should I have?”

We’d love to give you a straight answer right off the bat, but it’s not quite that simple.

It’s called personal finance for a reason — everyone has a different set of circumstances. To help you get to where you need to be, we’ll run through the different savings accounts you might want, how to figure out which ones are right for you (and how many) and which account features you should be aware of.

Types of accounts

Before figuring out your perfect number of accounts, you should know which kinds of saving accounts are available. Then, you can narrow them down depending on your circumstances.

Regular savings account

Most banks and credit unions offer savings accounts, so the simplest way to start saving is to open an account with whichever institution you currently bank with. That’ll likely be the easiest savings account to start with and will often make it simple to transfer funds from your checking to your savings account. However, this won’t necessarily guarantee you the best interest rates or account features.

High-yield savings account

Is maximizing your interest rate a priority? A high-yield savings account (HYSA) pays higher-than-average interest so that you can take your savings further. These types of accounts are offered mainly by online banks, but be sure to shop around.

A high-yield savings account is a great place for an emergency fund, a savings account dedicated to covering unexpected costs like car repair, medical bills or job loss.

To work out what account balance to aim for, figure out how much you spend each month and set aside around six months’ worth of expenses. The idea is that if you lost your income stream, you’d have enough time to set up another by living off your emergency fund temporarily. Plus, by keeping this fund in an HYSA, your money will work for you, earning interest while the money sits in the account.

If you prefer, think of it as “mad money savings,” a financial cushion that gives you the freedom to do things like switch jobs or get out of a bad lease.

Money market account

Money market accounts function as a kind of hybrid between a savings and a checking account. They usually come with debit cards (like checking accounts) and higher interest rates (like savings accounts) — but they may also involve restrictions on your minimum balance, transactions or withdrawals, so read the fine print.

Certificate of deposit

Certificates of deposit (CD) also offer higher interest rates than standard savings accounts, but there’s a tradeoff: You’ll have to lock your money away for a set period (e.g., two years). 

So while this can be a great option for saving and earning interest, you’ll want to make sure you won’t need access to the money for the duration of the CD. 

Health savings account (HSA)

An HSA gives you a tax-efficient way to save for healthcare expenses or even retirement. There’s a penalty if you want to use the money for non-medical purposes, but this is waived once you retire, so it can be a good option for both short- and long-term use.

Retirement savings accounts

Saving for retirement is smart — but you don’t have to just stick your money in a standard savings account. 

For maximum tax effectiveness and potential growth, consider setting up a dedicated account, like a 401(k) or a traditional or Roth IRA. But keep in mind, there are often penalties if you withdraw money from these accounts before retirement.

How many savings accounts should I have?

The magic number for how many bank accounts you need depends on your needs and preferences. Just as there’s no one-size-fits-all rule for how much you should save each month, there’s no fixed number for how many savings accounts to open. 

You can choose to mix-and-match different savings account types for your specific short- and long-term goals. For example, you might decide to put your rainy day fund in a traditional savings account, your emergency fund in a high-yield savings account and your retirement savings in both a 401(k) and an IRA.

You’re also not limited to one account of each type. If you want a vacation fund but you’re also saving for a car down payment, there’s no reason you can’t set up two different high-yield savings accounts — one for each savings goal. 

Having a dedicated account for each goal is an excellent way to track how close you are to reaching your target instead of having to do the math each time.

But if you’re worried about everything you’ll need to juggle if you open multiple savings accounts with different banks, there’s a solution. Some banks let you earmark funds for various financial goals while keeping everything in a single savings account.

For instance, Ally Bank offers an online savings account that allows you to create up to 10 “buckets” to represent your savings goals. This way, you can visualize exactly how close you are to each goal without opening separate savings accounts for each one.

How to choose between savings accounts

Hopefully, you now have an idea of which types of savings accounts you’d like to open and how many accounts you might need. But how should you figure out where to open those accounts? 

The best savings accounts on the market are constantly changing, and once again, your preferences matter. Here are some factors to consider:

• Minimum balance requirements: Some accounts may require keeping a certain amount of money in your account. If you need flexibility, look for an account with a $0 minimum balance. Look out for minimum balance requirements.

• Monthly fees: Be aware that some accounts charge monthly fees. Find out what costs you might be taking on by opening a new account. 

• Interest rates: Getting a higher interest rate might be a deciding factor for you when choosing between accounts. But read the fine print, as some interest rates might be tied to minimum balance requirements.

• Liquidity: If you need it fast, how accessible is your money? Traditional and high-yield savings accounts are usually the most liquid, while CDs and retirement accounts are subject to withdrawal rules. 

• Extra perks: Some banks might also offer extra perks, such as Ally Bank’s savings buckets.

• Insurance: Most traditional financial institutions are Federal Deposit Insurance Corporation (FDIC) insured, and most credit unions are NCUA insured. However, it’s still good to get into the habit of checking that your account is insured.

• Risk: You also need to consider the risks involved with an account. When you put money into most savings accounts, your money is safe. But retirement accounts are also investment accounts, which means your savings will be subject to market fluctuations and could lose value. It’s important to discuss these risks with a financial advisor.

What’s your lucky number?

We might not have given you a straight answer to the original question of this article, but hopefully, you can see why. There’s no universal answer to how many savings accounts you need — it’s always going to depend on the individual.

However, some aspects of personal finance are the same for everyone.

If you’ve struggled to accumulate savings in the past, you might have credit card debt that you’re trying to pay off. Consider using the Tally† credit card repayment app to help you pay it off. 

Tally consolidates your credit card debt with higher interest rates into a lower-interest line of credit and handles your payments on your behalf, making it easier to get back on track with your finances.

†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) will be between 7.90% and 29.99% per year and will be based on your credit history. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.