Is it OK to have 2 high-yield savings accounts?
You Could Lose Out on Higher Interest Rates
The flexibility of having more than one account can also help you manage fluctuations in interest rates, which could be important when the Fed eventually pauses its hikes and rates begin to move lower. Holding your savings in multiple accounts can also be a way to help you stay on track to meet specific goals.
Meanwhile, if you are joyful seeing your balance increase over time, you may have positive reinforcement to keep saving money for a specific account. One downfall of having multiple accounts is that it can be difficult to keep track of them all and to remember which account is for which savings goal.
Some disadvantages of a high-yield savings account include few withdrawal options, limitations on how many monthly withdrawals you can make, and no access to a branch network if you need it. But for most people, these aren't major issues.
That said, having between three and six months' worth of expenses in a high-yield savings account doesn't fit into all plans. You may decide to only keep two months' worth of expenses in your high-yield savings account instead in order to focus on growing your money.
If you deposit $50,000 into a traditional savings account with a 0.33% APY, you'll earn just $165 in total interest after one year. But if you deposit that amount into a high-yield savings account with a 4.35% APY, your one-year interest soars to over $2,175.
Although each financial situation is unique, it doesn't typically make sense for you to keep all of your money in a high-yield savings account. After all, most high-yield savings accounts limit withdrawals to only six per month, so a checking account is typically a better place to store your spending cash.
The FDIC insures up to $250,000 per account holder, insured bank and ownership category in the event of bank failure. If you have more than $250,000 in the bank, or you're approaching that amount, you may want to structure your accounts to make sure your funds are covered.
By themselves, multiple bank accounts generally won't affect your credit score, but your account history could show up on your ChexSystems report. As a budgeting and financial management tool, separate bank accounts may make it easier to handle your finances.
Bankrate.com's Mark Hamrick says spreading your assets across two or more institutions guarantees access to at least some of your cash if something goes wrong. "Simply because of the risk of fraud," he said, "that could be associated with a debit card that then denies access to our checking or savings accounts."
How long should you keep money in high-yield savings account?
Stampf recommends keeping six to 12 months' worth of expenses in a high-yield savings account for easy access to cash in case of an emergency and saving for larger expenses that are are coming in the short term, like buying a home.
As of February 2024, no banks are offering 7% interest rates on savings accounts. Two credit unions have high-interest checking accounts. Eligibility for these credit unions is limited according to geographic location and other narrow criteria.
![Is it OK to have 2 high-yield savings accounts? (2024)](https://i.ytimg.com/vi/XsEA9D-CVPw/hq720.jpg?sqp=-oaymwEcCNAFEJQDSFXyq4qpAw4IARUAAIhCGAFwAcABBg==&rs=AOn4CLCYslXmHy3XXzk9FUZFKyCGetpeWg)
For many people, one savings account is enough. A single savings account that earns high yields, has no monthly maintenance fees and is federally insured can be a smart place to park your money. A high-yield savings account can be used for multiple short-term savings goals.
Put that $10,000 in a high-yield savings account that earns 5% APY for the same amount of time, and you'll earn about $500. What your interest can buy: A dollar is enough to buy a soda — but $500 would get you a new TV or kitchen gadget.
Do You Have to Pay Taxes on Your High-Yield Savings Account? You only have to pay taxes on the interest you earn on a high-yield savings account—not on the principal balance. High-yield savings account interest is taxed at ordinary income tax rates.
' A high-yield savings account is a great place to park emergency savings. “There's no early withdrawal penalty when drawing from a savings account, whereas with a CD there typically is a penalty to cash it in prior to maturity.
Your best bet if you have extra cash is to put it in a high-yield savings account that can increase your savings but give you the option to withdraw the money if you need to. By law, consumers can withdraw or transfer cash out of a high-yield savings account up to six times per month without paying any fees.
Usually, you would choose to invest your money for long-term financial goals like retirement because you have a longer time frame to recover from stock market fluctuations. If the financial goal is short term, say five years or less, it's usually smarter to park your money in a high-yield savings account.
Similar to a high-yield savings account, CDs allow you to deposit money to earn interest on your balance. Sometimes, the interest you earn on a CD can even be higher than what you earn on a high-yield savings account.
Of all the financial institutions reporting, including commercial banks and federal savings banks, there are approximately 860 million deposit accounts (not including retirement accounts). But fewer than one percent–just 0.83 percent–of these accounts have more than $250,000.
Where do millionaires keep their money if banks only insure 250k?
Millionaires can insure their money by depositing funds in FDIC-insured accounts, NCUA-insured accounts, through IntraFi Network Deposits, or through cash management accounts. They may also allocate some of their cash to low-risk investments, such as Treasury securities or government bonds.
Can I open checking or savings accounts with more than one bank at a time? Yes. There are no restrictions on the number of checking and savings accounts you can open or the number of banks or credit unions with which you can have accounts.
Keeping accounts at multiple banks can help your financial health. Having your checking account (and emergency savings) at a different bank than where you keep your long-term savings accounts can help you stay on track with your savings goals.
The ideal number of bank accounts depends on your financial habits and needs. You might be happy with just two accounts – checking and savings – or you may want multiple accounts to separate business and personal expenses, share a bank account with a partner or maintain separate accounts for various financial goals.
While it is legal to keep as much as money as you want at home, the standard limit for cash that is covered under a standard home insurance policy is $200, according to the American Property Casualty Insurance Association.
References
- https://www.investopedia.com/how-many-savings-accounts-should-i-have-7775519
- https://www.cbsnews.com/news/should-i-move-all-of-my-money-to-a-high-yield-savings-account/
- https://www.experian.com/blogs/ask-experian/pros-cons-high-yield-savings-account/
- https://www.latimes.com/compare-deals/banking/savings/7-percent-interest-savings-accounts
- https://www.investopedia.com/why-have-multiple-savings-accounts-now-7510818
- https://www.gobankingrates.com/banking/savings-account/how-much-will-1000-make-in-a-high-yield-savings-account/
- https://www.investopedia.com/articles/forex/033015/10-riskiest-investments.asp
- https://www.forbes.com/advisor/banking/savings/how-many-savings-accounts-should-i-have/
- https://www.bankrate.com/banking/savings/reasons-multiple-savings-accounts/
- https://www.kiplinger.com/personal-finance/banking/what-is-a-high-yield-savings-account
- https://www.cnbc.com/select/fed-rate-hike-switching-savings-accounts/
- https://www.cnbc.com/select/high-yield-savings-account/
- https://www.experian.com/blogs/ask-experian/alternatives-to-high-yield-savings-accounts/
- https://finance.yahoo.com/news/know-deposit-more-10k-checking-130016900.html
- https://www.marketwatch.com/picks/cd-vs-savings-account-which-should-i-choose-6cc7169d
- https://www.marketwatch.com/picks/despite-some-paying-5-one-adviser-tells-us-high-yield-savings-accounts-are-overrated-for-this-reason-but-others-say-no-way-c4ac710
- https://fdlcu.com/should-you-keep-cash-at-home.html
- https://www.fool.com/the-ascent/banks/articles/heres-how-much-20000-earns-in-a-savings-account/
- https://www.cnbc.com/select/how-many-savings-accounts-should-i-have/
- https://www.consumerfinance.gov/ask-cfpb/can-i-open-checking-or-savings-accounts-with-more-than-one-bank-at-a-time-en-919/
- https://www.nerdwallet.com/article/banking/how-much-interest-can-i-earn-on-100-1k-or-10k
- https://www.nerdwallet.com/best/banking/high-yield-online-savings-accounts
- https://www.nerdwallet.com/article/banking/how-many-savings-accounts-should-i-have
- https://www.nerdwallet.com/article/banking/how-much-money-in-checking-and-savings
- https://www.irs.gov/businesses/small-businesses-self-employed/report-of-cash-payments-over-10000-received-in-a-trade-or-business-motor-vehicle-dealership-qas
- https://www.nasdaq.com/articles/7-things-you-must-do-when-your-savings-reach-%2425000
- https://fortune.com/recommends/banking/the-best-cd-rates/
- https://www.cnbc.com/select/tips-for-getting-your-first-100k/
- https://www.investopedia.com/how-much-cash-can-you-deposit-at-a-bank-8553483
- https://www.capitalone.com/learn-grow/money-management/how-many-bank-accounts-to-have/
- https://www.cnet.com/personal-finance/banking/savings/these-high-yield-savings-accounts-earn-5-percent-apy-or-more/
- https://www.usnews.com/banking/articles/how-many-bank-accounts-should-i-have
- https://www.forbes.com/advisor/banking/savings/are-high-yield-savings-accounts-worth-it/
- https://finance.yahoo.com/personal-finance/high-yield-savings-account-vs-traditional-savings-account-which-is-better-120024972.html
- https://www.cnet.com/personal-finance/banking/savings/what-is-high-yield-savings-account/
- https://www.nerdwallet.com/article/banking/what-the-fed-rate-increase-means-for-savings-accounts
- https://www.fool.com/the-ascent/banks/articles/heres-what-happens-if-you-deposit-more-than-10000-in-cash-into-your-bank-account/
- https://www.nerdwallet.com/article/banking/accounts-at-multiple-banks
- https://www.cbsnews.com/news/can-you-avoid-taxes-on-savings-account-interest/
- https://www.wcpo.com/money/consumer/dont-waste-your-money/why-you-should-never-keep-all-your-money-in-one-bank
- https://www.cnbc.com/select/pros-and-cons-high-yield-savings-accounts/
- https://fortune.com/recommends/banking/what-is-high-yield-savings-account/
- https://www.rocketmoney.com/learn/personal-finance/cash-deposits
- https://www.nasdaq.com/articles/heres-what-happens-if-you-deposit-more-than-$10000-in-cash-into-your-bank-account
- https://www.veem.com/library/are-wire-transfers-over-10000-reported-to-the-irs/
- https://www.jeniusbank.com/blog/articles/savings-categories-and-buckets
- https://www.nytimes.com/2014/10/26/us/law-lets-irs-seize-accounts-on-suspicion-no-crime-required.html
- https://www.cnbc.com/select/what-to-do-if-denied-bank-account/
- https://www.fool.com/the-ascent/banks/articles/are-savings-accounts-100-risk-free-the-answer-is-no-for-these-scenarios/
- https://www.investopedia.com/high-yield-interest-impact-on-taxes-8414834
- https://smartasset.com/checking-account/how-much-money-should-i-keep-in-my-savings-account
- https://www.quora.com/If-I-deposit-3k-every-month-cash-into-my-bank-account-will-I-get-audited-reported-to-the-IRS
- https://www.raisin.com/en-us/blogs/using-high-yield-savings-account-to-grow-your-money-faster
- https://www.experian.com/blogs/ask-experian/safest-place-to-save-money/
- https://www.chase.com/personal/banking/education/basics/pros-and-cons-of-a-high-yield-savings-account
- https://www.usnews.com/banking/articles/if-you-deposit-a-lot-of-cash-does-your-bank-report-it-to-the-government
- https://www.investopedia.com/should-you-save-your-money-or-invest-it-depends-4692975
- https://www.cbsnews.com/news/how-much-you-can-make-depositing-10000-into-high-yield-savings-account/
- https://www.cbsnews.com/news/how-much-money-put-in-high-yield-savings-account/
- https://www.experian.com/blogs/ask-experian/are-high-yield-savings-accounts-safe/
- https://www.usnews.com/banking/articles/what-is-a-savings-account
- https://www.cato.org/blog/less-one-percent-accounts-are-above-fdic-limit
- https://time.com/personal-finance/article/how-many-bank-accounts-should-you-have/
- https://money.com/how-much-money-high-yield-savings/
- https://www.ribaostore.com/blogs/news/how-much-cash-deposit-is-considered-suspicious
- https://www.fool.com/the-ascent/banks/articles/heres-what-happens-when-you-have-more-than-250000-in-savings/
- https://www.sofi.com/learn/content/what-happens-if-i-deposit-more-than-10000-dollars/
- https://finli.com/learn/cash-deposit-limits-2024/
- https://www.investopedia.com/what-can-i-earn-with-10k-in-a-cd-8400034
- https://www.irs.gov/newsroom/e-file-form-8300-reporting-of-large-cash-transactions
- https://www.quora.com/If-I-deposit-5000-dollar-every-month-will-this-alert-the-bank
- https://www.businessinsider.com/personal-finance/taxes-on-savings-account-interest-high-yield-savings
- https://www.ceauthority.com/StudyGuideContent/FAQS/AML%20glossary_0205.pdf
- https://answers.justia.com/question/2023/10/07/what-to-do-w-lrg-physical-cash-gift-from-983140
- https://www.freshbooks.com/hub/taxes/cash-deposit-irs
- https://www.key.com/personal/financial-wellness/articles/how-much-cash-for-emergencies.html
- https://www.dspmuranchi.ac.in/pdf/Blog/8)%20DEMERITS%20OF%20MONEY.pdf
- https://www.cnbc.com/select/how-to-use-high-yield-savings-account/
- https://panaceafinancial.com/resources/are-high-yield-savings-accounts-worth-it/
- https://smartasset.com/investing/high-yield-savings-account-vs-investing
- https://www.quora.com/Why-do-bank-tellers-always-ask-where-I-got-the-cash-Im-depositing
- https://www.experian.com/blogs/ask-experian/what-to-do-if-you-have-more-than-250k-in-bank/
- https://www.quora.com/Whats-the-smartest-way-for-me-to-deposit-30-000-cash-into-a-banking-account
- https://www.cbsnews.com/news/how-much-is-too-much-money-for-a-high-yield-savings-account/
- https://www.fool.com/the-ascent/banks/high-yield-savings-pros-cons/
- https://www.cnbc.com/select/high-yield-savings-account-vs-a-cd-whats-the-difference/
- https://howtopayforcollege.com/how-much-to-save
- https://www.annuity.org/personal-finance/banking/high-yield/
- https://www.cnbc.com/select/how-much-money-should-you-have-in-a-high-yield-savings-account/
- https://www.quora.com/Does-the-10-000-limit-on-cash-deposits-extend-to-two-different-banks
- https://www.waukeshabank.com/the-pros-and-cons-of-multiple-savings-accounts
- https://www.nasdaq.com/articles/heres-what-happens-if-you-deposit-more-than-%2410000-in-cash-into-your-bank-account
- https://www.cbsnews.com/news/how-much-100000-earns-in-a-high-yield-savings-account/
- https://www.sofi.com/learn/content/how-to-insure-excess-deposits/
- https://www.skynova.com/learn/taxes/cash-deposits
- https://smartasset.com/financial-advisor/where-do-millionaires-keep-their-money
- https://finance.yahoo.com/news/20-000-good-amount-savings-160036732.html