Can having multiple bank accounts help with managing personal finance?

Managing your money can be really challenging, especially when all of your income and expenses are coming and going from one bank account. When your bank is like Piccadilly Circus, no wonder it’s impossible to keep track of everything. So, Loqbox explores the benefits of having multiple bank accounts.

Having multiple bank accounts can be a great way to manage your budget

 If you haven’t created a budget for your finances yet, you should definitely sit down and do that first. You can read about different budgeting rules here, so you can find the one that’s right for you but we think the 50-20-30 rule works really well:

The 50/20/30 breaks your post-tax income into percentages: 

🏡 50% for things you NEED: rent, bills, mortgage, etc. 

💪 20% goes towards paying off your debts or reaching your savings goals.
💸 The remaining 30% for what you WANT: going out, shopping, streaming services, and so on. 

Using more than one bank account is a great way to organise these chunks.

Wait, can you have multiple bank accounts?

Yes, you can have multiple bank or building society accounts. There is no legal limit to the number of bank accounts you can have. However, it's important to ensure that you are able to manage all your accounts effectively to avoid incurring unnecessary fees.

Some banks will require certain things to open an account. For example, one account provider may require that your salary is paid into the account you open with them. These sorts of requirements could make it trickier to open multiple accounts, but there’s always another bank account to choose. If you want to open more than one account you can shop around for the best options. 

Some banks, especially app-based ones like Monzo, will let you use ‘pots’. These are sub accounts linked to your main one that could give you the flexibility to manage your money without opening multiple bank accounts. But whether it’s with pots, different account types (such as current accounts or ISAs), or different banks, you can boost your personal finances by separating your money.

Is it bad to have multiple bank accounts?

No, it's not bad to have multiple bank accounts. In fact, as mentioned above it can actually be really beneficial for managing your personal finances. Having multiple bank accounts allows you to separate your money and track your spending more effectively.

However, when you open multiple accounts you may be offered multiple overdrafts. This in itself isn’t a bad thing of course, but it does mean that you need to be careful how you manage the additional credit. If you go overdrawn with multiple overdrafts without a plan of how to repay them, you could hurt your credit score in the long run (more on that below).

Can you have multiple student bank accounts?

Yes, you can have multiple student bank accounts. Many banks offer student accounts with favourable terms and conditions such as no monthly fees or minimum balance requirements. 

However, it's important to consider the terms and conditions of each account and manage them effectively to avoid fees or problems down the road.

Does having multiple bank accounts affect your credit score?

No, having multiple bank accounts doesn’t hurt your credit score in the UK. At least, not directly. However, having too many accounts and applying for credit too frequently can impact your credit score negatively. Opening multiple bank accounts in a short period can raise suspicions of fraudulent activity and could impact your credit score. So if you can, aim to open no more than one new account or financial product within at  least six months.

Your credit score is calculated for you by the top three credit reference agencies (CRAs) in the UK: Experian, Equifax and TransUnion. It is a numerical summary of your creditworthiness when you apply for things like mortgages, loans and credit cards. Usually, higher credit scores are more likely you’ll be accepted and with better interest rates.

If you don’t know your credit scores, you can check with all three CRAs using these free websites that won’t hurt your score:

ClearScore (uses Equifax data)*
Credit Club (uses Experian data)
Intuit Credit Karma (uses TransUnion data)

*For transparency, we wanted to let you know that ClearScore pay us a small commission if you sign up using this link.

If your credit score has been affected and you’re looking for the best way to improve it, you could grow your credit score by up to 300 points in just three months using Loqbox Grow, Loqbox Save and Loqbox Rent together. Start your Loqbox membership for just £2.50 a week to get access to all three. 

Improvements to your credit score are not guaranteed.

5 advantages of having multiple bank accounts

If you’re wondering: “What happens if you have multiple bank accounts?” Loqbox has made a list of benefits of having multiple bank accounts - and some disadvantages - so you can decide if it’s the right thing for you. 

1. Incentives and rewards

Often banks will have incentives to encourage people to open an account with them, rather than with another bank or building society. If you are looking to open more than one account, you can actually benefit from these rewards with each one! Check a comparison tool like Snoop to find the best deals.

2. Better money management

Generally, having multiple bank accounts allows you to allocate your money more effectively and track your spending more accurately. You can use different accounts for different purposes such as bills, savings, and spending. You can work out what these different accounts should be for with the budgeting rules mentioned above.

Using different bank accounts keeps your day to day spending separate from your other financial obligations and goals. This means that direct debits for your bills aren’t eaten into by your spending on luxury items or nights out - or the other way round. Also, consider opening a joint account with your partner if you’re sharing bills, etc. 

3. Track spending and savings

Not only do separate bank accounts or pots help you track your spending: with Direct Debits serving various budgeting goals, you can use them to store your savings. Banks often offer dedicated savings accounts, which could give you higher interest rates on your payments. So take a look at what each bank has to offer and find the best for you.

You can also use a separate account for your business, if you run your own or work for yourself. This can keep the business account ‘noise’ out of your personal finances and helps you to better manage your money. Banks will often have dedicated business accounts with perks specific to your needs, so take a look.

4. Flexibility, convenience and back-up

Having more than one account with multiple banks is actually a great way to avoid the inconvenience of being locked out of an account, for example, if you lose your debit card or if there is fraudulent activity on it. You can simply transfer money and use one of your other accounts as a temporary fix.

5. Greater fraud protection

In the UK, the Financial Services Compensation Scheme (FSCS) offers protection on your money of up to £85,000 per bank. So, if your money is held with more than one financial institution, you can increase your protection against fraud or sudden closures. But be sure to check which banks run your accounts as some own more than one brand.

So, is it good to have multiple bank accounts?

Yes. There are some really great benefits of having multiple bank accounts. But as with anything, you need to make sure that you manage those benefits properly to avoid the disadvantages. Here are some things to watch out for: 

  • Of course, having multiple bank accounts means that you have money in different places. This can be difficult to keep track of unless you have a simple and sensible plan. Open as many as you need, not as many as you can.

  • You also want to be careful not to make lots of bank account applications in a short space of time. This sort of activity - especially if you are trying to apply for overdrafts on each one - can have a negative impact on your credit score. 

  • With more accounts, there is a slightly higher chance that one of them will be affected by fraud or scams. This is true of any account, but the probability that you will be affected is increased a bit by having more accounts to attack.

  • If any bank accounts that you open have fees, you could end up paying for several different ones. This isn’t a bad thing if the benefits justify the cost, but just be aware of those costs and check they make sense.

So, you know what you need to look out for. But, if you’re trying to create and manage a budget, having multiple bank accounts can really help you to separate out and track your spending, increase your protection and even grab some more perks and rewards!

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For just £2.50 a week, you could see your credit score rise by up to 300 points in the first three months
Get started
Improvements to your credit score are not guaranteed