How many and which bank accounts should one have?

How many bank accounts should I have? Everyone probably asks this question at least once in their life. It feels like there is a new app and a new tool every week that wants to make your financial planning easier. It doesn’t matter whether it’s about saving, managing money or investing. As far as my personal financial planning is concerned, I follow the Kiss principle, which says: keep it simple, stupid!

That’s why I’ll give you three bank accounts that you really need:

1. The checking account – your management account

A checking account is the standard account offered by most banks. It is often used as a payroll account and serves as a daily means of payment. This is your administration tool, so to speak, on which you get your salary and with which you pay your bills. Depending on the bank, you will get a giro card or credit card that you can use to withdraw money and make purchases.

The checking account is the basic equipment. Depending on your needs, there are a few things you should consider:

Fees: You should find out about the applicable fees, as these can vary depending on the bank. There are often monthly account maintenance fees, but there are also fees for transfers, cash withdrawals, and other transactions. However, some banks also offer free checking accounts.

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Interest rate: Checking accounts don’t usually offer a high interest rate, but there are some banks that do offer interest rates on their checking account. But: As a rule, you should not have large amounts of money lying around here. So look at the fees rather than the interest.

Services: It’s important to check how easy it is to withdraw or transfer money, what your transaction limit is, and how online banking works. Ideally, the bank has set up various security mechanisms to protect you from fraud.

2. Call money account – your piggy bank

A call money account is a savings account with higher interest rates than a checking account. It’s a good way to park money for the short term or build a nest egg and earn interest on it. Access to the money is mostly unrestricted, making it a flexible savings option.

Some money market accounts have restrictions, such as a minimum deposit or a minimum term. You simply avoid such offers if they don’t suit you. After all, there are plenty of other offers.

Otherwise, there are two important things to consider: the interest rate and deposit insurance.

The interest rate on the call money account – as flexible as the account itself

Pay attention to the interest rate for the money market account. Compares interest rates from different providers to find the account with the highest interest rate. However, there are often conditions on the interest rate. Checks the conditions attached to the interest rate. Some banks offer a higher interest rate for a limited period of time or impose conditions such as a minimum investment amount or a minimum account term.

This is exactly what has happened to me: you open a money market account, are happy about the interest and then the letters come from the bank that the interest rate has been adjusted downwards. Because the interest is just as flexible as the account. If you want to avoid this, pay attention to an interest rate guarantee. An interest rate guarantee gives you more planning security for your finances.

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But the bottom line is that we don’t get the interest here either, but the returns are in the third “account”. Good deposit insurance is much more important at this point.

Deposit insurance – how safe is your money?

In the past few days, the Silicon Valley Bank in the USA has caused a stir and customers have withdrawn their funds from the bank. According to the latest status, deposits are protected here up to a sum of 250,000 dollars. These have already been transferred to a newly formed company under government control to be paid out to customers.

This also means that if you have more money in the bank accounts, in the worst case you have to say goodbye to it. Deposit insurance is in place to protect your money in the event of bankruptcy.

The German deposit guarantee is a state system that aims to protect bank customers’ deposits in the event of bank insolvency. It protects a deposit of up to 100,000 euros per customer and bank. This means that in the event of a banking crisis, affected customers can receive compensation of up to 100,000 euros.

Therefore, the following also applies: You should never keep more than 100,000 euros in a bank.

3. The share portfolio – your leverage

I have already mentioned elsewhere that interest on the checking account or on the call money account is quite nice, but not really relevant. Because you bring your money to this account to increase: your share portfolio.

This is where you hold and manage your shares or ETFs and make your money work for you.

Some neo-brokers are currently even offering reasonable interest rates of two percent or more for the money that you hold in the stock portfolio and do not invest. That sounds attractive. But there are also a few things to consider with neo-brokers. I’ve written about it here before.

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Disclaimer: Stocks, cryptocurrencies and investments are always associated with risk. A total loss of the invested capital cannot be ruled out either. The published articles, data and forecasts are not an invitation to buy or sell securities or rights. They also do not replace professional advice.