Why Two Checking Accounts For Budgeting

I have noticed that some people use two checking accounts for budgeting.  I was wondering what do you gain from this?  Is it more for discipline and knowing that one account is only for bills?

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  • I have 4 checking accounts. Account 1 is at a brick and mortar bank. It's where my paycheck is direct deposited. Mortgage, condo fee, and HOA are debited from it. It's billpay interface is dumb. They have an ATM in the lobby of my office building. I don't close it because I opened the account when I was a minor so my mom's name is also on it and we would both have to go to the bank to close it and it's just not worth the effort.

    I opened Account 2 in 2012 right before I moved overseas. Technically it is a Cash Management Account. I opened it because they don't charge a fee for international ATM withdrawals which was key for 3 years living abroad and a desire to avoid opening a local bank account in order which would require annual reporting to the US Treasury Dept. It has a tiny bit of interest each month. I like their billpay interface. However, even though I am back in the US, I still travel abroad for work. I don't like to keep too much money in this account when I'm traveling because in a lot of the places I go, cash is king (ie only can use a credit card for the hotel) but the ATMs are not that secure and I don't want to risk too big of a loss from a skimmer.

    I have Account 3 because I don't know why. I had an online savings account at Capital One 360 (now switched over to their money market account) and for whatever reason opened an online checking account as well. I swear, I only use it once a year to send my friend money for the beach house our group rents every year. I used it a little more when I was living abroad because I could initiate payment online and it would mail paper checks. That's how I paid my CPA for those 3 years I think.

    I bought a rental property in August and set up a completely separate YNAB budget for it and opened Account 4 to be exclusive to that. It's an online checking account at Discover bank. I happened to have a savings account in their online bank as well (I opened that account in order to get a $300 sign up bonus). The "owner draw" happens when I transfer funds out of the checking account and into the savings account which is an on-budget account in my personal budget so it shows as an expense in the "business" budget and an income event in the personal budget.

    So basically my answer is laziness. I spend based on category balances exclusively so I never have to worry about the money being there for bills.

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    • jenmas 

      You use an ATM?  I haven't used one in probably 5 years.  As for paying others I find it easier to just use Paypal.

      I do have another one but that is because it is with a bank I no longer use.

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      • jenmas
      • jenmas
      • 2 yrs ago
      • 1
      • Reported - view

      VoltaicShock When I'm overseas, I generally have to use ATMs because I travel to countries that are cash-based. Also, the exchange rate on a $100 bill is literally twice as good as on 5 $20 bills (as long as the c-note is in pristine condition) and it's a pain to get a bank teller to try and give me the "good" bills because nowadays at a lot of banks even the tellers are having the cash spit out at them from a machine as opposed to pulling from a cash drawer (though the occasions where I do need a roll of $100s to take into a country as an emergency stash in case I need to be evacuated in a hurry are what keep me tethered to a brick and mortar bank because an online bank can't do that for me). In the US, I don't use a lot of cash; in fact I took money out of the ATM this week for the first time since October (though I think I must have gotten some cash from my sister repaying me for her half of my dad's Xmas gift). I cannot explain why, but I have a visceral hatred of Paypal so I don't use it if I can avoid it.

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  • We use 2 checking accounts. One is for bills and one is for debit purchases, such as gas, groceries, etc. I would really like to get it down to one account again, someday.

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    • MsTJ
    • YNAB has given me back my future
    • Believer_in_YNAb
    • 2 yrs ago
    • 1
    • Reported - view

    I have 2 checking accounts.  One for personal use, one for business use.

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  • I considered it YNAB nirvana when I reached having only 4 accounts: checking, credit, cash and capital (savings).

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  • One checking account pays 3% interest so I use it like a savings account. My other checking account pays virtually no interest but I get free checks and get reimbursed for ATM usage. I need cash for gifts and to pay my lawn service and for other odd jobs around my house. The dollar amount is small so I give them cash.

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  • For practical and security reasons? I have one account for travel, because it offers a no-fee debit card that I can use around the world. I prefer to keep a limited amount of money in it, for security reasons, in case my account gets hacked while I'm traveling. And because I rarely use this for everyday things, I can depend on a certain amount being there for when I need it. Another account gets me half-priced coffee at their cafes (Capital One), and their ATMs dispense bills in any denomination I prefer, which is handy. A third account is my primary checking for depositing paychecks and paying bills. Since the first two are free, and the latter is free with a minimum balance, I don't see any reason to consolidate. It seems safer to split my money up, and they each offer unique features. 

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  • My second chequing and one of the savings accounts were opened in the last year with entirely mercenary motivation, simply to get the promotional interest and bonus reward payment for opening the accounts and making the requisite deposits over a specific period of time. This is a game I can play because of the accumulation of funds for true expenses and emergency funds in my budget. I currently have the equivalent of 6 months of income in my accounts.

    I keep a third savings account at a bank where a relative banks, a legacy from a time when I was tasked with paying her bills while she was in crisis. I haven't gone through the steps to close it yet even though the crisis seems to be (happily) a thing of the past.

    Eventually I will probably simplify and consolidate again, or possibly lump-sum transfer some funds to another promotional interest account.

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  • We only have one checking account.  We always have.  Most of our bills are paid with our rewards CC.  So mostly the checking account is a holding place for our money, it's where we receive our direct deposits and to pay the CC in full every week.  

    I do have two savings accounts though.  One has small amount of $4000 in it that is at the same bank as our checking (in case we need fast access to money in an emergency).  And the other savings is our online savings earning 1.5% for our emergency fund.  

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  • Hey VoltaicShock !

    I'm going to move this over to the Tips & Tricks section. :)

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  • We have 3 current accounts between us. 1 individual each and 1 joint account. 

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  • The reason that I have a second account it back up in case of identity theft. Something that unfortuity due to the immaturity on my first ex-wife I have suffered several times, I have also had my debt card cloned. I try to keep enough in the second account that I can buy gas and groceries for the 7-10 days it general takes to get me a new card and the funds back in my account.

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  • Transaction account (joint) - pretty much day to day expenditure
    Online saving account  - earns interest, can only do online transfers as not connected to a card. This is were emergency fund sits plus non daily expenses 

    Personal accounts, one each - for our pocket money.  Hubbies is kept off budget, I don't even need budget for his pocket money, as his pay is split between accounts.  Mine is on budget as I am the one who budgets, so I track my pocket money in a category.

    We personally feel better for having an account that is our own.  Lawyers friends advise to always have your own account.  I worry about what if something was to happen to one of us and the other was locked out of all accounts, so having our own account with some money gives us that peace of mind.

    Then, of course  there are credit cards

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  • I am thinking that it might be a good idea to separate a card that one swipes away from the account that receives direct deposit.

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