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When I opened an account at a bank, I was given two bank accounts: a savings account, and a chequing account. I was also given a debit card that is linked to the chequing account. The chequing account and the debit card have no monthly fees. The current interest rate is 0.05% for the savings account, and 0% for the chequing account. For the last 5 years, due to low interest rates, I have placed 100% of my cash in the chequing account and completely avoided the use of the savings account. Managing one account instead of two accounts saves time:

  • Record-keeping is simplified. There is only one set of statements that records all my cash transactions.
  • I do not have to make small transfers from the savings account to the chequing account whenever I need cash in the chequing account. All the cash is already in the chequing account.

I maintain up to $10k of liquid funds in the chequing account, of which $1,000 is for regular spending and $9,000 is for saving. I am currently losing out on $4.50 of interest per year ($9,000 * 0.05% = $4.50) by not using the savings account. I do not mind this small loss, given the conveniences listed above.

What are the disadvantages of this arrangement? Is it less safe than using two accounts?

Assume that I am highly disciplined in managing my spending, and in regularly checking my bank accounts for suspicious transactions.

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  • You've covered everything.
    – gaefan
    Jul 10, 2021 at 3:42
  • @gaefan What are the disadvantages?
    – Flux
    Jul 10, 2021 at 4:25
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    If you frequently need to make small transfers from savings to checking, you aren't budgeting your money properly. If you budget properly, you'll typically have only one savings account transaction each month: a deposit.
    – chepner
    Jul 10, 2021 at 13:22

2 Answers 2

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There are some disadvantages:

I maintain up to $10k of liquid funds in the chequing account, of which $1,000 is for regular spending and $9,000 is for saving.

Putting everything in one account makes it easier to fool yourself into thinking that you are saving. That $9,000 is supposed to be your emergency fund, your life happens fund, and any other things you are might be saving money for: vacation, next car...

Multiple accounts forces you to do a better accounting of your savings.

I do not have to make small transfers from the savings account to the chequing account whenever I need cash in the chequing account. All the cash is already in the chequing account

That debit card in the hands of the wrong person makes it easier to drain all your money. Even if you check everyday, it can still take time to get the money returned.

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Record-keeping is simplified. There is only one set of statements that records all my cash transactions.

On an absolute scale, having two accounts isn't that much more complicated.

I do not have to make small transfers from the savings account to the chequing account whenever I need cash in the chequing account. All the cash is already in the chequing account.

Then don't make lots of small transfers. Forecast your needs for the month, and have that amount (plus a cushion, plus accounting for income) there at the beginning of the month.

For example, I start the month with $2200 in my checking account, knowing what my expenses will be and how much I earn every two weeks.

I maintain up to $10k of liquid funds in the chequing account, of which $1,000 is for regular spending and $9,000 is for saving. I am currently losing out on $4.50 of interest per year ($9,000 * 0.05% = $4.50) by not using the savings account. I do not mind this small loss, given the conveniences listed above.

There are banks (in the US, at least), which pay 10x as much (which means you're losing less to inflation).

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  • I have a UK savings account paying 0.4%, and they just offered me an extra 0.1% bonus rate for 1 year (making 0.5%). Jul 11, 2021 at 15:07

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