Opening a bank account is pretty easy these days thanks to online banking and apps.
But how many accounts is too many and is it OK if they are spread across different banks?
We asked a finance and consumer expert what we need to consider when using multiple accounts, including whether it's worth consolidating them.
Why do people use multiple accounts and banks?
According to data from the Australian Banking Association, the average number of bank accounts Australian's have is about 2.4 per person.
Kate McCallum and her husband have multiple accounts, including an everyday account, savings, individual spendings, a home loan and offset account, spread across three different banks.
"It just so happened that we were able to get a better mortgage through one bank than our two existing banks," says the finance adviser and author.
"So, we went with the third bank for our mortgage and that's where our offset account lives."
Ms McCallum, who is based on Darkinjung lands on the News South Wales Central Coast, believes it is not necessarily how many accounts you have, but how you use them that matters.
"There is no 'right number'," she says.
"If you have multiple accounts and they each have a purpose, bravo.
"But many people end up with umpteen accounts that may have had a great reason originally and now have none and it compounds when you couple."
According to our Instagram straw poll, many of us have more than the national average.
Of 1,811 votes on the ABC Lifestyle account, 43 per cent said they had between three and four accounts, while 32 per cent had between one and two accounts.
18 per cent had between five and six accounts, while seven per cent had more than seven accounts.
Our stats are in line with what Ms McCallum has observed when helping clients get their finances in order.
"When I deal with people, [the number of accounts] often is one of the biggest friction points," she says.
She says there are three things that can happen if you have too many bank accounts:
- Stress (including relationship stress). Having to navigate moving money between different accounts, not truly knowing your financial position.
- Losing track of where money is going or held, so it's hard to build wealth
- Wastes time
The cost of having multiple accounts
Andy Kollmorgen, investigations editor at consumer advocacy group Choice, says when it comes to day-to-day banking, it's important to make sure your bank isn't charging account-keeping and administrative fees.
It's particularly important if you're setting up several accounts for your budget, as you could be charged multiple fees.
"All fees will need to be disclosed on the relevant product disclosure statement for the account, which you can find on the website," he says.
To find account fees on a banking app, you typically need to navigate to the account details section and look for a 'fees' or 'account Information' section.
Some account-keeping fees are charged each month, while others may be conditional on making a certain number of transactions or deposits.
You might find yourself forgetting about a bill or direct debit and being charged an overdraft fee.
Some people even forget about old bank accounts they have set up. In fact, Australians have about $2.3 billion in forgotten bank accounts, shares and life insurance.
Know why you have different accounts
If you have multiple bank accounts, Ms McCallum recommends assigning each one a purpose.
For example:
- Workhorse Account: For daily transactions
- Wants & Wishes Account: Personal guilt-free spending money
- Wow Accounts: For specific savings targets — like travel or deposit for a home
- Wealth Builder: For future you — and if you have a mortgage, this may be an offset account
Automating regular payments can help you manage your money better.
"Things like future car registration, rent, mortgage payments, groceries, petrol, anything that you know is a regular expense," she says.
She says she likes to review accounts monthly.
"I've had it twice where a number of transactions were going through at $89.99 and it was actually a fraudulent transaction."
Ms McCallum also recommends mapping out your money flow (money in, money out) so you have an understanding of your expenses, income and what your savings goals are.
Tips for consolidating accounts and banks
Ms McCallum says the more that you can consolidate, the "less stuff there is to do".
If you want to reduce the number of accounts you currently have, you could:
- Identify accounts: Locate all your bank accounts, including savings.
- Choose a bank: Decide if you want to consolidate into an existing account or open a new one at a different bank. Consider factors like interest rates, fees, and online access.
- Move your money: Transfer funds from the accounts you're closing to your chosen account.
- Update direct deposits and automatic payments: Contact service providers to update your banking information to avoid any disruptions. Ask your bank to provide a list of direct debits and recurring transactions.
- Close old accounts: Once all transfers are complete, close the accounts you no longer need.
This article contains general information only. You should consider obtaining independent professional advice in relation to your particular circumstances.
