Bank accounts multiply but some Australians take it too far

Holding several bank accounts can help people achieve savings and wealth goals, but there is a tipping point where things can turn sour.

Does your financial life feel yanked in all directions by a booming number of spending options and apps, subscription services, social media and investment platforms? Even the old-fashioned bank account is multiplying.

Technology has made life easier and faster — bank accounts can be opened online in minutes — but for some it increases financial complexity, with millions having multiple bank accounts and potentially losing track of them.

Money specialists say it can be good to have accounts with names reflecting savings goals – such as homes or holidays – and often recommend between three and five different accounts. We’ve come across consumers with 19 or more different bank accounts – brain explosion, anyone?

Mozo.com.au's Claire Frawley says check what fees are charged by your bank accounts.

Research from comparison website Mozo.com.au has found a majority of Australians have more than one bank account, with 22 per cent having between three and seven accounts.

Mozo personal finance specialist Claire Frawley says having too many accounts can cause headaches and extra costs.

“If you have more than five accounts, it might be time to review how you are using them and make sure you aren’t being charged any unnecessary fees,” she says.

“Some bank accounts have account keeping fees, charged every month, if conditions like depositing a set amount aren’t met each month, these fees can really add up.

“It’s important to be able to manage all the accounts you have, especially if you have direct debits coming out of your account. Overdraft fees can be as high as $15 a day.”

Frawley says accounts have specific purposes so ensure you use them for the right reason.

“It’s not a great idea to have a bonus savings account and use it like a transaction account, missing out on the bonus interest,” she says.

Frawley says many banks now offer the ability to split savings into different goals within the same account.

Finder.com.au money specialist Alison Banney says there is so much choice in the market and money is spread across more institutions than in the past.

Finder.com.au's Alison Banney says viewing bank accounts side-by-side can help.

“The number of bank accounts you should have completely depends on your personal situation, your preferences and how you like to manage your money,” she says.

“At a minimum, it’s a good idea to have one bank account for everyday expenses and a separate savings account to earn interest on your savings. However, there are a number of other types of bank accounts you might want to open as well, such as a joint bank account, an offset account or a business bank account.”

Banney says customers should look out for extra fees, and try to avoid confusion caused by juggling many accounts. Viewing accounts side-by-side helps, so use the same bank or apps that show you this overview.

Originally published as Bank accounts multiply but some Australians take it too far