Is Having Multiple Bank Accounts a Bad Practice?

This was asked by Ashutosh Mishra on our FinTalks Facebook Group on 6th May 2021.

He asked this:

Having multiple bank accounts, Is that a bad practice?

I already have a SBI Savings account (Zero Balance) and a Kotak 811 Savings account (again Zero Balance)

I want to get a HDFC bank savings account, because of the amazing online shopping offers that come with it. I know the MAB (depending on the account variant) is ₹10k or ₹25k, which one will be better? And what are the benefits of one over another?

I am not getting this to get a credit card, coz I am not 21 now nor am I salaried, neither is HDFC issuing Credit cards nowadays


The Answer:

Well, no, legally speaking, there is nothing wrong with having multiple bank accounts. In fact, you can have multiple bank accounts of the same bank too. Even you can have multiple account types of the same bank in same branch too, for example, savings, salary, current, etc.


Now that the legalities are clear, it is beneficial to have multiple bank accounts and having your money spread across different banks. It will give you multiple benefits:

  1. Up to 5L of depositor’s money is insured by DICGC. So, it makes sense to have different bank accounts and keep chunks of money spread across them.
  2. In case one bank’s server is down, you can continue using other bank’s cards / UPI to purchase something or send money to someone.
  3. In case any bank goes bankrupt and RBI puts restrictions on withdrawing money from that bank account, you can use other bank accounts to continue your transactions.
  4. You can use different bank debit cards for getting sale discounts in e-commerce websites, online food and grocery order discounts, and other places.
  5. You will get access to pre-approved loans and credit cards from different banks if you keep an account with them. I got preapproved credit cards from HDFC Bank, ICICI Bank and Axis Bank, without having an income proof, just because I kept balances in those. Read: How to Apply for a Credit Card? [ALL METHODS]


But well, every coin has two sides. Having multiple bank accounts come with its own set of disadvantages as well.

  1. It is a headache to maintain all the bank accounts especially their passbook and cheque books. You also need to keep all the mobile banking apps installed.
  2. Most private banks require you to keep 10k MAB, (although some banks offer Zero MAB accounts), so if you have 5 such bank accounts, your 50k balance will be blocked and will be earning only a meager savings interest.
  3. It becomes a cumbersome process while filing ITR every year as you need to audit your bank accounts to compute your income/expenses.

I hope this helps all readers with useful insights.

Coming to the different HDFC Bank Account Tiers, check this post: HDFC Bank Savings Account All Details

Thank you for reading. Don’t forget to join our FinTalks Facebook Group & FinTalks Telegram Channel for regular updates on banking and finance.

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