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Should You Combine Your Savings And Spending Account?

Deborah Gan

Deborah Gan

Last updated 24 November, 2021

Does combining your savings and spending account help you earn more cashback? Or does it fuel your overspending habit? If your finances have been steadily declining, then maybe it’s time you change your approach.


You whip out your debit card to pay for a new item, only to realise that your card has been declined for insufficient funds. Thank goodness you have a separate savings account — at least you know you’re not broke. Yet.

When it comes to finances, everyone has their own way of managing it. But this then begs the controversial question: do you use a separate account to spend or chalk up all your funds in a single account?

Whether you want to rake in higher interest with more funds with a joint account or prevent overspending with separate accounts, here are some reasons to consider if you’re thinking of making the leap.

Pros of combining your spending and savings account

#1 Rack up higher interest rates

Not a fan of the meagre interest rates typically offered by banks? You’ll realise that some banks offer a higher interest rate when you deposit or transact a larger amount of funds. When you combine both your savings and spending stash, you will be able to accumulate more funds, translating into higher interest rates that will yield more than just a few cents per month.

On top of that, certain savings accounts allow you to stack up on transactions by crediting your income, credit card spend, home loan repayments and insurance premiums to help you earn higher interest. This is a much more viable option if you combine both your spending and savings account into a single bank account. 

#2 Avoid minimum balance fees

If you didn’t have a tonne of cash lying around when you were a student, chances are you’re probably very familiar with the minimum balance requirements that certain bank accounts have, and charges you a monthly penalty fee when your balance falls below it.

For those who have separate spending accounts, you might be more prone to being charged the penalty fee if your account balance falls below the required minimum, especially near the end of the month when the budget that you’ve set aside for your expenses depletes.

Combining both accounts will thus save you the trouble of always having to ensure that your funds stay well above the minimum balance, so you can avoid paying that unnecessary and very avoidable expense. 

#3 Maximise cashback

When it comes to cashback, no one actually uses it to earn money, but instead to offset purchases in the future. Though a 1% cashback may seem extremely insignificant, the money can amount to a significant figure in the long run.

Some banks offer cashback when you maintain a certain amount in your account or transact a minimum sum of money per month. By combining both your savings and spendings account, you can maximise your cashback when you spend on your credit card or credit your salary to your account. 

#4 Easier to have an overview of your finances 

With a combined savings and spending account, you’ll also be able to have a clear overview of your finances.

Find out your monthly surplus when you minus off your expenses from your income, and start working towards your financial goals from there when you can visualise your monthly cashflow.

As mentioned earlier, some banks reward you for combining your insurance, investments and loans into a single account or card with higher interest, allowing you to track your monthly expenses easily without having to log into multiple accounts just to ensure that your payments are up to date or that you are not blowing your budget.

Cons of combining your spending and savings account

#1 Avoid overspending

Especially if you’ve self-identified an overspending problem, maybe separating your savings and spending account will be your best bet at resisting temptation.

Separating your accounts gives you control over your spending, allowing you to set aside a budget for your monthly expenses, and forcing yourself to only spend within your spending account and not touch your savings at all.

However, be sure to set realistic goals — you can’t expect yourself to only spend S$100 a month when you’ve been barely trying to keep it below S$600. Setting unrealistic budgets will just make you feel worse about yourself.

#2 Avoid reaching cap amount to enjoy higher interest rates

There are banks that offer higher interest with a higher balance, while there are others that cap the interest rate at a certain amount.

If your bank account falls in the latter category, splitting up your savings and spending accounts may be your best bet at taking advantage of the highest possible interest rate with both accounts. 

#3 Easier to manage automated monthly payments

Insurance premiums and investments sure eat into our savings, but ask any financially-savvy friend and they will assure you that both are absolutely necessary.

Stay on top of your monthly payments by creating automated monthly payments. By separating your spending and savings account, and using your spending account to pay for your fixed monthly expenses, you will be able to manage your funds easily and clearly.

You can even have a third account just for your monthly payments, where you can automatically pump in funds on a specific date each month before your payments are due so you don’t have to worry about whether they have been paid.

Should you combine them?

You’ve seen both sides of the coin, and while there are benefits to either approach, whether to combine your accounts ultimately depends on your needs and spending habits. 

If you need a whole lot of self-discipline to cut back on spending, we recommend getting a separate savings and spending account so you can budget accordingly and ensure that you spend within your means.

If you’re someone who takes their cashback very seriously, you can combine your accounts to maximise your cashback and even higher interest rates that will be worth it in the long run.

There is clearly no one-size-fits-all solution to every individual’s finances, so it’s up to you to decide which is best for your financial situation.

Read these next:
Best Savings Accounts In Singapore To Stash Your Cash
Differences Between Bank Account Types You Need To Know
Best Alternatives To Savings Accounts In Singapore (2021)
Best Short & Long Term Endowment Plans in Singapore (2021)
How Much Savings Should I Have At 35 In Singapore?

A mahjong addict with an undying love for dogs, Deborah is always on the hunt for cheap deals because she is always broke. That is why she is attempting to be more financially savvy to be.. less broke


Use a personal loan to consolidate your outstanding debt at a lower interest rate!

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