Managing multiple bank accounts across different banks in Singapore offers both strategic advantages and practical challenges. On the one hand, it allows you to diversify your financial portfolio, access a wider range of banking services, and potentially earn higher interest rates. 

It also enhances the protection of your savings under the Singapore Deposit Insurance Corporation (SDIC). With the deposit insurance (DI) scheme limit set at S$100,000 per depositor per bank, spreading your funds across multiple banks can increase the total amount covered. 

On the other hand, it can lead to increased administrative tasks, higher fees, and a more complex financial landscape. This article delves into the key benefits and drawbacks of holding accounts at multiple banks, helping you make an informed decision that aligns with your financial goals and lifestyle.

How many bank accounts should you open in Singapore?

A good rule of thumb is to have at least three bank accounts: one for daily transactions, one for savings, and one dedicated to building wealth. This structure helps you clearly separate your money based on its purpose, encouraging better budgeting, saving, and investing habits.

In Singapore, many people use multiple accounts to organise their finances more effectively. For example, one account might cover everyday expenses, while another is set aside for long-term goals like an emergency fund or retirement savings. Having distinct accounts makes it easier to track progress and stay disciplined with your financial goals.

>> MORE: When you should open a second bank account in Singapore

Why having accounts at multiple banks in Singapore can be beneficial?

Opening bank accounts with different banks in Singapore offers several advantages, enhancing your financial flexibility and security.​

• Maximise financial offers: Each bank provides unique promotions, such as higher interest rates, cashback, and exclusive deals. For instance, the OCBC 360 Account offers up to 6.3% p.a. interest when certain criteria are met, allowing you to earn more on your savings. ​

• Avoiding fees: Banks in Singapore often charge fees to customers who fail to maintain a minimum balance. For example, Maybank charges a S$2 monthly fee if the average daily balance in a savings account falls below S$1,000. By distributing your funds across different banks and ensuring each account meets the minimum balance threshold, you can avoid these charges.

Similarly, some banks in Singapore charge a penalty for early withdrawal of fixed deposits (FDs while others don’t. So, to avoid this penalty, you need to choose the bank offering no-penalty FDs.

>> LEARN: Differences between bank account types

• Diversifying services: Different banks offer a range of services, including online banking features, loan options, and personal finance tools. By having accounts with multiple banks, you can take advantage of the best services each offers, tailoring your banking experience to your needs. ​

• Security benefits: Spreading your funds across different banks can help minimise risk if one of the banks faces issues, adding a layer of financial security.

>> SEE: The high-yield savings accounts with the best savings interest rates

While having multiple bank accounts in Singapore offers certain advantages, it also presents several challenges that can complicate your financial management.

• Complexity in management: Juggling multiple accounts across various banks can make it more difficult to track your spending, manage balances, and keep track of fees and charges. Each bank may have different systems and interfaces, requiring more time and effort to stay organised. ​

>>MORE: Learn when you need another bank account

• Maintenance fees: Some banks charge maintenance fees unless a minimum balance is maintained. Managing multiple accounts with such requirements can become costly if not carefully monitored. ​

>>SEE: Learn the right way to manage your credit card collection

• Overlooking accounts: Maintaining too many accounts increases the risk of overlooking payments or incurring unintended fees, especially when minimum balances are not met or accounts are left dormant. Dormant accounts are vulnerable to forgeries and may incur penalties. ​

• Time-consuming administration: Managing multiple bank accounts requires more time spent on transferring funds between accounts, checking balances, and ensuring timely payments. This administrative burden can be overwhelming and may lead to errors or missed opportunities.​

>>COMPARE: The best savings accounts in Singapore

Does SDIC insurance cover multiple accounts at the same bank in Singapore?

As mentioned, SDIC provides protection for eligible deposits up to S$100,000 per depositor, per bank. This means that if you hold multiple accounts, such as savings, current, or fixed deposit accounts, at the same bank, the total coverage is capped at S$100,000 across all those accounts combined. 

For example, if you have S$60,000 in a savings account and S$50,000 in a fixed deposit at the same bank, only S$100,000 is insured under SDIC. Any amount above this limit would not be protected in the unlikely event that the bank fails.

>>LEARN: All about Singapore Deposit Insurance Corporation (SDIC)

What to do if I want to insure more than S$100,000?

To ensure coverage beyond the S$100,000 limit per bank, consider diversifying your deposits across multiple banks. Each bank participating in the Singapore Deposit Insurance Corporation (SDIC) scheme provides separate insurance coverage of up to S$100,000 per depositor. However, it is essential to verify that the bank you choose is covered by the DI Scheme. 

All full banks and finance companies in Singapore, unless exempted by the Monetary Authority of Singapore (MAS), are required to be DI Scheme members. However, wholesale and merchant banks are not included, so deposits with them are not insured. Foreign banks with a full banking license are included in the DI Scheme. You can refer to the official SDIC website for the complete list of DI Scheme members.

Moreover, if you are holding substantial funds, explore fixed deposits or other investment opportunities that offer higher returns. Some of these products may have different insurance coverage or risk profiles, so it's essential to understand their terms and consult with a financial advisor to make informed decisions.​

By strategically allocating your deposits and selecting suitable financial products, you can enhance the protection of your funds beyond the standard insurance limits.

>> Get competitive interest rates across short and long-term FDs: See the best fixed deposit rates