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How To Open A Second Personal Bank Account (And Why You Might Want To)

Opening a second personal bank account can be a smart money move for taking control of your finances. With another account at your disposal, you can better separate funds for specific goals, earn higher interest rates, stick to budgets, and have a backup if issues arise.

In this beginner‘s guide, I‘ll walk through all the steps for opening a second account, choosing the right bank, finding the best rates, gathering the needed documents, and seamlessly managing multiple accounts. Let‘s get started!

Why Open Another Account?

First, let‘s look at some of the main reasons why opening a second personal bank account can pay off:

  • Compartmentalize Your Cash – Over 50% of people report using multiple accounts to separate money for specific purposes like bills, taxes, vacations, holidays, car repairs, medical expenses, and more. This makes it easier to budget, save, and restrict spending to align it with your financial goals.
  • Earn Higher Interest – Interest rates can vary widely across banks and account types. With another account, you can shop around for the highest yields whether you want to grow savings, maximize CD earnings, or simply earn a bit on your everyday spending money. The average online savings account pays over 15 times more interest than brick-and-mortar banks.
  • Gain More Control – Studies show that people who use multiple accounts to allocate spending money are up to 20% more likely to stick to a budget. With everything combined in one pot, it‘s too tempting to overspend.
  • Have a Backup – If you ever run into issues with one account being hacked, frozen, or otherwise inaccessible, having backup funds could really save you. About 14% of people report opening a second account specifically for this purpose.

Choosing the Right Bank

When deciding where to open your second account, you‘ll want to consider:

  • Fees – Overdraft fees, minimum balance fees, ATM fees, and monthly maintenance fees add up. Aim for banks with low or no fees. According to the CFPB, the average bank account has around $150 in annual fees.
  • Interest Rates – Online banks tend to offer the highest interest rates on savings and CDs – up to 25 times higher than national brick-and-mortar banks.
  • Access – Choose a bank with widespread ATMs and easy account access from anywhere via robust online and mobile banking.
  • Customer Service – Read up on customer satisfaction and complaints. According to the ACSI, major banks like BOA, Chase, and Wells Fargo have satisfaction ratings around 70%, while many online banks are 80% and up.
  • Additional Features – Look for budgeting tools, savings goals, spending insights, and automation to better manage your money.

Here‘s a look at how some top banks compare across these criteria:

BankFeesInterest RatesAccessServiceFeatures
Chase$12/mo standard0.01% APY savings16k ATMs69% satisfiedGoal setting
Wells Fargo$10/mo standard0.01% APY savings13k ATMs71% satisfiedAccount alerts
Capital OneNo monthly fees0.40% APY savings46k ATMs63% satisfiedSavings tools
Ally BankNo monthly fees2.00% APY savings43k free ATMs80% satisfiedBuckets, goals

According to consumer satisfaction and features, an online bank like Ally comes out ahead for a great second account option.

Which Account Should You Open?

Once you‘ve chosen a bank, the next step is deciding which type of account best suits your needs and goals:

Checking – Best for everyday purchases if you want debit card access, check writing, ATM withdrawals, etc. Usually no interest.

High Yield Savings – Ideal for savings goals where you want to grow your money. Average interest rates are around 0.50% APY for brick-and-mortar and 2.00% for online banks.

Money Market Account – Earns higher interest than checking while still allowing withdrawals and checks. Rates average 0.15% for traditional and 0.80% at online banks.

CDs – Lock in even higher rates if you don‘t need access to the funds for a set period of time. Average CD rates range from 0.08% for 3 months up to 0.60% for 5 years.

Additional Products – Choose a bank that can provide expanded services like auto loans, mortgages, investment accounts, and credit cards as your needs grow.

Think about your spending habits, savings goals, and financial plans to decide the ideal account type to open.

Finding the Best Account Deals

Here are some tips for finding the optimal second bank account for your specific needs:

  • Compare High Yield Savings Rates – A quick online search makes it easy to identify who‘s offering the highest interest on savings accounts and CDs. This can really add up over time.
  • Maximize Bonus Offers – Many banks offer cash bonuses for opening a new account with a minimum deposit. These average around $150 for savings and $500 for CDs if you meet the requirements.
  • Avoid Monthly Fees – Steer clear of any accounts that charge just for the privilege of holding your money unless you can consistently meet fee waiver requirements.
  • Watch Out For The Fine Print – Understand the nitty gritty details like overdraft policies, excess activity fees, dormancy fees, and any other surprises. Ask if unsure!
  • Consider Future Needs – Find a bank you can grow with that will meet more of your financial needs over time.

Using sites like NerdWallet and Bankrate allows you to filter and compare accounts across all these factors to uncover the best deals.

Gather Account Opening Documents

Before starting the application process, make sure you have the following handy:

  • Valid Government Photo ID – This includes a driver‘s license, state ID, passport, etc. It must show your current address.
  • Proof of Address – Provide a current utility bill, bank statement, or government mail showing your address if it‘s not on your ID.
  • Initial Deposit – Have at least the minimum opening deposit ready to fund the account. This averages around $25-$100.
  • External Account Info – To set up transfers, note account and routing numbers from any existing bank accounts.
  • Employer Details – If setting up direct deposit, have your employer name, address, and phone number available.

Pulling these pieces together ahead of time will allow your new account to be up and running smoothly in no time!

Seamlessly Managing Multiple Accounts

While it may seem tricky at first, there are some simple strategies to keep things organized when you have more than one account:

  • Consolidate Online – View all balances and transactions in one place by connecting accounts in your main bank‘s online banking platform.
  • Automate Transfers – Set up repeated transfers on a set schedule to keep a consistent flow of funds between accounts for bills, savings, etc.
  • Create Nicknames – Give each account a nickname like "Bills Account" or "Travel Savings" so you know at a quick glance.
  • Reconcile Regularly – Make it a habit to check all accounts and transactions once or twice a month to stay on top of things. Set calendar reminders!
  • Build Account Buffers $100-500** – Keep this cushion in accounts to avoid overdrafts from timing mismatches between income deposits and withdrawals.
  • Consolidate Statements – Opt for online e-statements to access PDFs for all accounts neatly in one place for tax time and tracking.

Let‘s Do This!

I hope this overview has prepped you to confidently open and manage a second personal bank account like a pro! Please let me know if you have any other questions as you kickstart your multi-account journey. Here‘s to taking control of your finances and making the most of your money!



Michael Reddy is a tech enthusiast, entertainment buff, and avid traveler who loves exploring Linux and sharing unique insights with readers.