I'm a banking expert – four reasons you should have more than one current account | The Sun

WITH virtually every bank and building society in the country offering a current account, it can be difficult to choose which one to use.

Most people use their current account as their main bank account, where their salary or earnings are paid in and bills are paid out of.

But often, people open a current account and never think about it again.

In fact, research has shown that you're more likely to change your life partner than your bank account.

But there's no reason to stay loyal – plenty of banks offer incentives to new customers including free cash.

HSBC is dishing out £170 to those who open an account currently, as long you meet the criteria, First Direct pays £150 and Nationwide £125.

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But even if you don't want to switch bank entirely – there's no reason to keep all you cash stashed in the same place.

Damien Fahy, founder of money website and podcast Money to the Masses, said it could be worth having more than one current account so you can make the most of what different banks offer.

More protection

There are a number of reasons why you may wish to consider having more than one bank account, Damien said.

“Firstly, the Financial Services Compensation Scheme (FSCS) will pay up to a maximum of £85,000 (or £170,000 for joint accounts) if your bank or building society fails. 

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“If you are likely to hold more than this in your current account then it would be wise to split it across multiple accounts with different banks or building societies.”

Also be aware that the FSCS protection is per banking licence and some banks and building societies use a shared banking licence.

That sounds a bit complicated, but it basically means where different bank brands are operated by the same parent company – HSBC and First Direct are a good example.

Tech fails

Another reason you might want a different account is in case of an outage.

“Banks and building societies can sometimes experience technical difficulties and so having an alternative bank account may provide you with extra assurance,” Damien said.

Sites such as Downdetector can help you monitor outages.

Technical glitches mean you can't transfer cash or you might not get your salary on time.

If you are considering another current account for this reason, then it may also be wise to consider banks that use different payment networks, so you have the option of using Visa or Mastercard.

Perks and features

Having more than one account could help you take advantage of different features.

Damien said: “You may find that a bank has one particularly attractive feature, but not all of the features appeal. 

“For example, one might provide excellent cashback opportunities but you may prefer the itemised spending features or free overseas spending on another account.

“Having two accounts means you get the best of both.”

Better budgeting

Having multiple accounts could also help you to budget better, said Damian.

You could, for example, move a certain amount of money into a savings account each month, or you might keep enough for all your bills in one account.

“Moving money designated for bills into a separate account could help people avoid overspending and going overdrawn," said Damien.

“Some app-only bank accounts now have features that replicate this flexibility but within one account, by using what are often referred to as ‘pots’ or ‘spaces’, removing the need to manage money from multiple accounts.”

Is there any limit on the number of accounts I can open?

There are no limits in terms of the number of current accounts you can have, but Damien said it's best not to open too many.

Damien said: “Be aware that when you open a new account you will be credit checked so it is worth spacing out any applications, especially if you plan on taking out credit or a mortgage in the near future.”

Also consider that the more accounts you open, the easier it is to lose track of them, so keep a spreadsheet with all the details.

Another thing to bear in mind if you have multiple accounts is that some require you to pay in a minimum amount each month, or have at least one direct debit set up.

Damien also suggested considering packaged bank accounts, which charge a fee, but give you a number of benefits, often including gadget insurance, travel insurance and breakdown cover.

These can save you money but only if you're sure you are going to use the perks.

He added: “Joint account holders could potentially save money as the benefits are available for both account holders but make sure you work out whether the packaged account is good value for money for you."

What about savings accounts?

You can also have a number of savings accounts if you want to grow your money.

Some savings accounts have deposit limits – so, depending on how much you wish to put away, you may find that you need to spread your money across more than one.

Damien said: “But deposit limits aside, there is no real benefit to having multiple savings accounts unless you wish to put away more than the £85,000 maximum that is protected by the FSCS on a sole account.”

He said cash savings platforms offer the best way to keep on top of the best savings rates without having to open multiple savings accounts. 

“Services such as Raisin and Hargreaves Lansdown Active Savings bring together a number of banks and building societies so that you can easily move your money in and out of a number of different savings accounts, all from one central account,” he said.

How can I manage my money in multiple bank accounts?

Damien recommends using a budgeting app such as Money Dashboard or Emma to keep on top of all your accounts.

He said: "This lets you see all of your bank accounts in one place so you can keep track of all of your balances without having to log into each one separately.”

These apps also allow you to keep track of other financial products including credit cards, pensions and investments.

You can even make transfers between your different bank accounts.

However many accounts you have, it's sensible to review them once a year to make sure you're still using the features and check if you can get better perks elsewhere.

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Make sure that you read any letters, online messages and emails from your bank as these will often include the latest updates to the terms and conditions, said Damien.

“Also make sure you know when any bonus interest rates expire on savings accounts so that you can move your money to get a better rate of interest,” he said.

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