3 Reasons to Split Up Your Checking and Savings Accounts

It's convenient to have all your money in one place. That's why I like banking with Chime -- I can access my checking and savings accounts from one screen. But there are downsides. The biggest is that Chime's savings account APY is mid-tier. I could do much better.

One solution is splitting up my checking and savings accounts. By opening a separate savings account, I can earn better interest on my long-term emergency fund. More reasons to split up your bank account are dumb fees and a lack of good features (bucketing, anyone?).

1. Your savings account interest rate is low

It's reasonable to open a savings account with a different bank if your current account has a cruddy interest rate. Many APYs that used to be great are now just okay. Chime's 2.00% APY used to be one of the best. Now, it's half of what the best high-yield savings accounts offer.

Earning a great APY can help you save faster. Say you have $6,000 in a savings account. After a year, a 2% APY will earn you $120. Compare that to a 4% APY that earns you $240 in a year, enough to cover the cost of a yearly $60 Costco Gold Star membership four times over.

Our Picks for the Best High-Yield Savings Accounts of 2024

Product	APY	Min. to Earn
American Express® High Yield Savings Member FDIC. APY 3.80% Rate info 3.80% annual percentage yield as of December 28, 2024. Terms apply. Min. to earn $0 Open Account for American Express® High Yield Savings On American Express's Secure Website. Member FDIC.	3.80% Rate info 3.80% annual percentage yield as of December 28, 2024. Terms apply.	$0	Open Account for American Express® High Yield Savings On American Express's Secure Website.
Capital One 360 Performance Savings Member FDIC. APY 3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening. Min. to earn $0 Open Account for Capital One 360 Performance Savings On Capital One's Secure Website. Member FDIC.	3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening.	$0	Open Account for Capital One 360 Performance Savings On Capital One's Secure Website.
Western Alliance Bank High-Yield Savings Premier Member FDIC. APY 4.46% Rate info The annual percentage yield (APY) is accurate as of November 7, 2024 and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY. Min. to earn $500 to open, $0.01 for max APY Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website. Member FDIC.	4.46% Rate info The annual percentage yield (APY) is accurate as of November 7, 2024 and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.	$500 to open, $0.01 for max APY	Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website.

You can keep your current bank accounts and open a new one for the bulk of your savings. You can also close your old account and switch banks completely, but sometimes, it's worth keeping your old accounts to avoid the hassle of shifting all your finances.

2. Your bank account charges fees

In the year 2024, there is little reason to stick with a bank that charges you fees up the wazoo. Seriously. Being charged maintenance fees is no longer a given; many online banks let you open checking and savings accounts with zero monthly fees.

If you're being charged maintenance fees, overdraft fees, or non-sufficient funds (NSF) fees, it may be time to open another checking account. (You can close your current account, but keep it open if you think having both would make your life easier.)

The banking app Chime is great for checking. It's super simple and charges very few fees. The downside is you've got to open a checking account if you want to open a savings account.

3. Your bank account lacks features

Banks and credit unions offer features that vary from institution to institution. Some prioritize simplicity; others prioritize interest rates; the big ones let you take out loans, mortgages, and insurance from the same app you use for banking.

One popular feature that few banks offer is bucketing, which involves splitting up your savings into buckets. For example, you could label one bucket "summer vacation" and another "emergency fund." This makes it easy to budget for specific goals.

The Ally Savings account is known for its bucketing feature, which allows you to go wild with categories. The Ally account charges zero maintenance or overdraft fees, and the APY is among the highest. The downside is Ally has no physical bank branches.

Should you split accounts or switch banks?

Split your accounts if the best checking and savings accounts for you are at separate banks, and you are okay with juggling accounts. I prefer this option because no single bank or credit union gives me everything I want in one place. It's a little more work, but worth the better rates.

Switch banks altogether if you want all your checking and savings in one place. It's convenient and can save you time and money. However, it takes some effort to close accounts, especially older accounts linked to subscriptions and bill payments -- something to keep in mind.

Interest rates, fees, and features are all good reasons to split accounts. When shopping around, decide on your top priorities to get the most out of your new bank accounts.