Determining the right number of bank accounts to have in Canada can be a personal decision. While there is no set limit to the number of accounts you can open, there are several factors to consider when deciding how many bank accounts are appropriate for your financial situation. In this article, we will explore the advantages and disadvantages of having multiple bank accounts and whether you should opt for traditional brick-and-mortar banks or online banks.
In Canada, there are no strict rules regarding the number of bank accounts you can own. You have the flexibility to choose whether to maintain a single account or multiple accounts with different financial institutions.
There are various types of accounts, with savings and chequing accounts being the most common. You can have several of each without impacting your credit score.
There are several compelling reasons for maintaining multiple bank accounts:
Some individuals prefer to use different accounts for distinct purposes, such as separating chequing and savings accounts. You might also opt for multiple chequing and savings accounts to manage expenses, savings goals, and emergency funds separately.
If multiple bank accounts help you manage your finances more efficiently, having several accounts could be beneficial. This can be particularly useful for budgeting purposes.
If you have a substantial amount of money, diversifying it across accounts at different banks can be a smart move. This can also be a strategy to stay within the coverage limits of the Canada Deposit Insurance Corporation (CDIC), which provides deposit insurance up to $100,000 per category.
Some banks offer special promotions and perks, such as cashback or reward points for debit card spending. Maintaining multiple accounts allows you to take full advantage of these offers.
For couples, a joint account can simplify the management of shared finances.
However, you can have more than that, including individual accounts for each spouse and shared chequing and savings accounts. This approach can help manage shared expenses and individual spending effectively.
If you are a business owner, it is common to maintain more than one account to meet various financial needs. The minimum recommended accounts for a business are:
This account is used for day-to-day business operations, including receiving income and paying bills.
Set aside an account for saving funds throughout the year to cover your tax bill.
Allocate an account for saving profits for specific purposes, such as business investments.
You can customize this arrangement to suit your business’s unique requirements, including income accounts, payment accounts, and savings accounts.
When choosing a bank account in Canada, you have the option to select between traditional brick-and-mortar banks and online-only banks. Each type has its pros and cons:
Some recommended online banks in Canada include Simplii Financial, Neo Financial, and EQ Bank. They offer benefits such as low or no monthly fees, attractive interest rates, rewards, and more.
Popular big banks in Canada with competitive interest rates, fees, and a range of products include Scotiabank and Bank of Montreal (BMO).
When selecting a bank account, consider the following factors:
The number of bank accounts you should have in Canada depends on your financial goals and preferences. Whether you opt for a single account or maintain multiple accounts, it is crucial to choose the type of bank and account that aligns with your specific needs. Weigh the advantages and disadvantages of both online and big banks to make an informed decision that suits your financial situation.
