When people clean their homes in the spring, they have to determine what to keep and what to toss. Financial accounts also need their own form of spring cleaning. But how do you know when it’s time to declutter your accounts?
I never thought much about how many bank accounts I had—until I realized I couldn’t be sure I had kept track of them all. The problem wasn’t that I had a lot of money (unfortunately, I don’t); I had grabbed account-opening bonuses here and there – trying to grow my savings – until I was spread too thin. At its worst, I had four brokerage accounts, three bank accounts, two health savings accounts, and three 401(k)s. I wanted to remove money from a digital bank that also provided brokerage services, and they made it as hard as possible to get my money and close my account.
I learned later that I wasn’t alone. About one-third of Americans have three or more financial apps for checking, savings and digital wallets, according to a recent survey by S&P Global. Another study by banking research firm Cornerstone Advisors in 2021 found that it’s not unusual for Gen Z or Millennial couples to transact business with 30 to 40 financial providers,” says Ron Shevlin, the firm’s chief research officer. “Americans’ financial lives have become more complex.”
So, how many bank accounts are too many? Here’s how I answered the question.
The risks of too many accounts
As my bank account list grew, so, too, did my concerns over security. How did I know an account hadn’t had fraud?
More accounts meant more passwords, authentication requirements and potential fraud or identity theft exposure. Account takeover attacks (ATO) increased by 24 percent year-over-year in 2024, according to identity threat protection company SpyCloud. In 2023, ATO attacks resulted in nearly $13 billion in losses.
Some accounts also had fees, maintenance charges, or minimum balance requirements. For example, the average checking account maintenance fee on interest-bearing accounts is $15.45, while the average for noninterest accounts is $5.47, according to Bankrate’s 2024 Checking and ATM Survey.
Some bank accounts have a $3 fee for a paper statement, Bankrate recently reported. And savings accounts and money market accounts are often limited to six withdrawals per month. I had to start tracking fees, turning off paper statements, tracking balances, moving funds around and deciding where money should be parked. It all translated to more time.
And that’s where my metric for the number of bank accounts comes from: My time. Managing multiple accounts became so time-consuming that extra interest wasn’t worth it. I call it “the rule of two hours” for managing savings.
The rule of two hours: A practical benchmark
The “rule of two hours” is a simple way to determine whether managing multiple accounts is worth your time. Consider your hourly wage. If, for example, you make $30 per hour, two hours of managing accounts or transferring funds equals $60 of your time. If the extra effort earns you less than that in interest, it may not be worth it. And that’s a signpost that you have too many accounts.
For example, if you have $10,000 in savings and are chasing a 0.25 percent rate increase (in annual percentage yield, or APY), you would earn only $25 extra per year, which isn’t worth two hours of effort. An additional 0.75 percent APY gains you $75, making your profit – after the cost of your time – $15, assuming a new account adds two hours of management during the year.
The previous examples illustrate how accumulating savings can be far more lucrative on your time than investing savings. Two extra hours at work generating $60 extra in wages is more worthwhile than piddling away time managing new bank accounts – at least to a point.
The risks of too few accounts
If you’ve been banking with the same institution for decades, you might not realize what you’re missing. In fact, it’s quite common.
The average American keeps their checking account at the same institution for 19 years and their savings account for 17 years, according to Bankrate’s latest Checking Fees Survey. Often, both accounts are at the same bank, and the account holder hasn’t seen the interest rates on their accounts.
Keeping all funds in one bank makes it difficult to compare interest rates and find better deals on savings accounts and certificates of deposit (CDs). This is why the average APY on a U.S. savings account (as of late March) is 0.61 percent while top-yielding rates on savings accounts are higher than 4 percent APY, as I covered in my recent article on negotiating with your bank.
Without a second account, there’s also limited flexibility. If your bank’s customer service or digital experience declines, switching can be challenging if all your finances are tied to one institution. Some financial institutions offer better credit card rewards, loan rates or investment tools. Without accounts elsewhere, you may not know about helpful financial tools that could help you with your finances.
Think of it like getting a second opinion. It’s generally wise to consult multiple doctors before agreeing to a significant procedure. If your car’s radiator needs work, it’s smart to compare mechanics. Using financial institutions is the same way.
So, how many are too few? One is too few, for sure. Two may be, especially if their rates and services are similar. Because money has inertia, you want to prevent missed accumulation. If you’re missing out on compound interest, it can result in suboptimal financial results over many years.
Steps to spring clean your bank accounts
To strike the right balance, consider these five steps:
- Step 1: Maintain at least two banking relationships – one for daily transactions and another for higher-yield savings.
- Step 2: Check current accounts to ensure they haven’t dropped rates.
- Step 3: Consolidate unnecessary accounts – If an account isn’t serving a clear purpose, closing it can reduce complexity.
- Step 4: Automate savings transfers – Set up automatic transfers to optimize savings without spending excessive time managing accounts.
- Step 5: Review your banking setup every six months – Ensure that your accounts align with your financial goals and offer competitive rates.
Bottom line
Don’t have so many bank accounts that time wasted – and fees assessed – mitigates the value of your returns. And don’t have so few that you don’t know when you’re missing better rates.
The value of your time is an excellent guide for banking choices. Using the rule of two hours, you can use a dollar figure to test your options and to evaluate whether your banking setup serves your best interests.
Smart banking isn’t just about where you save—it’s about how efficiently you manage it.
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