How many bank accounts do I really need?
I have too many bank accounts and want to reduce them to simplify. I have a brick and mortar checking and savings account. I have a CapitalOne checking, a CIT on-line savings, and PurePoint Financial savings (my main on-line bank with 2 years of cash (living expenses, as I'm retired). I'd like to keep a local bank, so I can fund my cash envelope budgeting, but I know I don't need to have as much as I have in there. What is your logic as to how much to keep in a checking account? Should I close the brick and mortar savings account? I opened it up years ago to avoid overdrafts and be able to make quick transfers. I certainly don't need the CIT account. It was originally where I had my 2 years of living expenses. I can cancel my CapitalOne account. I thought that I'd send this out to validate I am right before I start closing accounts.
1 checking at credit union (local)
1 savings at credit union (local, only keep 5 dollars in it- requirement for checking)
1 high yield savings (on line)
4 credit cards, will reduce to 3 soon.
I value simplicity as well. I may reduce my credit cards to 2 in the future.
Here is an article on simplification on the YNAB site https://docs.youneedabudget.com/article/1132-simplify
You have YNAB. You don't need a cash envelope budget. I may be biased because I've been using Capital One for a very long time, but if you want to simplify, Capital One checking and Capital One Money Market account if you have at least $10k (not savings account) are all you really need.
I haven't has a brick & mortar bank for personal accounts in at least a decade. I get my cash from Allpoint ATMs which are everywhere.
I have one main account for each type of tender, plus a savings account to earn interest. To emphasize that these are my 4 accounts, I named them all things that start with C: Cash, Checking, Credit, and Capital. I do 90% of my spending from these 4 accounts.
I have a savings account at a credit union because I find it useful to have a credit union membership (they held my car loan until recently). My credit card from there is my oldest; I’ve kept that, too. I have two other credit cardsa that are old enough I don’t want to close them, so they are also in my budget. I had a savings account at CapitalOne360 but moved all my money to the MMA, so that savings account is on-budget, too. I also have a checking account there which I only use if I can’t do a direct transfer from savings—I consider it an extension of the savings account and it’s not in YNAB at all.
But I do almost all my spending from my 4 C accounts. Technically, one account per tender is all you really need.
Where I live and work - two. A current account for salary and spending, and a linked savings account for parking medium term funds.
Back in the UK, four.
A current account (I think this is what you call checking) for all payments and income.
A linked savings account to park the money that's for medium term aims (holidays, emergencies). The reason is I find having the large sums in my day to day account disconcerting, but I can transfer it instantly.
Two credit cards. One because there's a debt on it. One out of habit, I should get rid of it really.
I'm not counting investment accounts like ISAs or bonds of course. Is anyone else?
For personal: Checking and savings at a brick and mortar. I need to be able to get $100 bills and have them swap out old ones for new ones and you can only do that with a teller. Checking account and MMA at Capital One 360 (I only use that checking account once or twice a year), also 4 CDs. Cash Management account at Fidelity for fee-free ATMs when I am out of the country. Savings account at Discover online. 1 CD at Ally that I opened for a bonus plus a savings account that I also opened as part of the bonus getting. I move money around twice a month (when paychecks clear). I don’t spend more than 10 minutes total each instance so I don’t see any need to reduce. I also have 8 credit cards on budget.
I also have a separate checking account for my rental property, but that has it’s own budget. It’s at Discover, so I just transfer the “owner draw” once a month to the Discover savings account and treat it as an income event in my personal budget.
I probably have too many but it works for me.
1 Checking acct at local credit union (current APY 1.35% on balances up to 25k, which im well below). I tried online checking but i like having a local branch i can go to for convenience and i got a safe deposit box with them which requires an account to auto deduct the fee each year.
1 Money Market account at Ally, i think it's APY is at .9%. This doesn't hold money, but in the event i need immediate access to my Ally savings account I can transfer to this then use checks or my debit card.
3 Savings Accounts from Ally (current APY 2% no balance requirements). Two of these really should be converted to UGMA accts they hold money i am putting aside for my two neices for when they get older (currently they are just regular savings in my name with them each being listed as a beneficiary in one). And one holds all my mid term savings and emergency fund.
The only savings i have that i would say id call long term is my Roth IRA, which i hold at Edward Jones.
Finally 2 credit cards. One Capital One card is currently PIF each month. The second is from my credit union carrying a small balance ill get paid off in the next few months then i will also keep it PIF. I use these for all my auto bills ie Netflix. I have a thing against any automatic transactions coming out of my checking, just a direct deposit and my safe deposit box fee only.
I should perhaps point out that I only started using the credit card once I was comfortable using YNAB. Before that I had closed another credit card account once I'd paid it off. I used to have more bank accounts which were used in place of categories pre-YNAB. My system is simpler now, verging on boring 😊.
I'm in the UK and have the following on budget:
1 Current Account (checking account)
2 Savings Accounts
- 1 e-saver - used for money management and supposedly some interest but the rates are rubbish
- 1 ISA - which is a tax-free savings account in the UK meant for longer term savings
1 Wallet - cash account
5 Credit cards
- Mainly for historical reasons
- 2 are always PIF - 1 Mastercard and 1 Amex - and are used for most of my day to day transactions. Both have good rewards. Amex is my default payment method on local transport. You can use any contactless card or the older prepay Oyster cards but there are weekly caps which you only reach if you use the same card. I've started to use Amex where it's taken because it is much quicker at identifying and recording pending transactions which makes manual input YNAB much easier
- 2 have historically only been used if I needed access to 0% funds at a good rate so usually sit at £0. I don't use these for day to day transactions but I like the fact that one is a VISA card just so I'm not over-reliant on one system.
- 1 Revolut pre-paid account - also a VISA card and used for small-scale foreign currency transactions.
All my Direct Debits and Cash (what little there is as I hate cash) come out of my checking account but otherwise I pay most things using one of my 2 main credit cards. Years ago (pre-YNAB) and when interest rates on savings accounts were 6% not <1%) I used to run a similar pots system in a spreadsheet and single savings account. An hours work on a Saturday max would earn me around £120/year. Not huge amounts but I was earning very little at the time. The main benefit though was that I had the car insurance money there when it was due. Remind you of anything? Using credit cards to pay for everything bought you a bit more interest. My checking account only had the money I could spend that month and it regularly ran very close to £nil. Deliberately. I actually liked running it that way.
Now with YNAB I no longer need the savings account or the spreadsheet but I've continued to use credit cards for everything I can for the air miles/cash back vouchers and just the ease/cashflow. The key change to my system is that I no longer monitor the checking account balance so religiously so I get twitchy if my checking account balance goes below £1,000. I receive a text alert if it goes below £1k and a second if it drops below £500. This might sound like I'm flush but remember nearly all spending goes via a credit card.
Interest rates are so rubbish at the moment that the impact of moving money between my checking and savings accounts is paltry. I mainly do it out of habit or because I think it might be better in case of fraud. I simply do a high level glance at scheduled payments* that month (mainly CC) add £1k and a bit for luck and then transfer any thing else to the linked savings account. If I get an alert that it's dropped below £1k I'll transfer some back.
*I don't have them set up as scheduled payments in YNAB as the extra work doesn't give me any perceived benefit.