Are there any disadvantages to opening many current accounts (I have 4 at the moment. I’m 19) apart from the initial drop in “credit score”? I find it a lot easier to manage money in multiple current accounts because it is easier to control a budget for different things (large essential things, saving, everyday spending, and non-essential stuff).
Personal view? Not really, no.
Credit score is a something and nothing and that’s about the only thing that will be impacted.
You may want to avoid temptation by not having an overdraft on all of these accounts, however!
Other than the initial hit you mentioned the only other thing I can think of is credit utilitasion. They like to see you using a certain amount of your available credit.
So if you open more accounts you might have more credit and your percentage will drop.
One of them is a student account so had a decent overdraft but I avoided the overdraft option on the others. I have been nowhere near using my overdraft on any of them and I am aware of the risks.
I avoided getting an unarranged overdraft on 2. Another is a student account but I haven’t used the overdraft on that one and I don’t know about the other one (only just opened it).
Fair enough. Good to know.
Credit utilisation as Ordog discusses is more to do with credit than current accounts so that shouldn’t be impacted at all. Not that I’m a great believer in any of these metrics anyway.
Sorry, Feathers is correct. I always assumed it took into account overdrafts too but I checked and it strangely doesn’t
Thanks for your help!
I know basic things about banking and credit etc but not all of the more complex details so I’m glad you were able to help with my concerns
Convention has long held that people only have one current account but the reality is that you can have more.
If you find a financial system that works for you but needs a number of different accounts then go for it.
I have 16, plus Revolut, TransferWise, Monese, Dozens etc.
I just like seeing how each company does things. And I collect the cards, have done for years.
I may also have a bit of an obsession about the cards
I have also gone for accounts that have slightly different features - good student account, good savings account, cheque imaging etc so it’s not just about budgeting.
I have 2 - I want to get a 3rd but fear it will impact me.
I have 0 overdrafts and don’t plan on getting one as of yet
I have 11 current accounts. Zero credit.
No overdrafts on any of them. Don’t believe in them.
I used to have 3 or 4 but they were never used. In my minimalist lifestyle that I live I asked myself why and then closed them all down. Now I just have Monzo.
I’m almost there. In fact, today I received an email from HSBC informing I’ve not used my current account for 3 months and so it’ll be closed in 9 months with no use. No big deal. I’ve used Midland/HSBC since the late 80’s as my primary accounts so HSBC had had its fair share of income from me.
That leaves several other unused legacy accounts to die by the wayside, plus Revolut which may be ignored, in the quest for personal-finance-karma
I live for minimalism. But I also can never seem to settle and love trying out new things. So here I am in the same boat as @j06! Though I am pretty quick to close down accounts I just don’t like, so I don’t have quite as many open as they do.
But I must admit, I do use far too many finance products than I’d like to. I’d love to weed them down to 3 or 4 that covers all my needs. A bank, a credit card, wealth management, and perhaps a payments platform like PayPal or Cash.
All the ones I use do serve a use though. And I must admit I’ve always admired the stance taken by folks like @PaulUK, and if credit didn’t come with so many benefits, it’s a mantra I’d follow too.
So here’s an interesting polling experiment for @Peter_G if he’d care to run with it. If you had to limit yourself to one single financial institution, who would it be?
I do like the idea of trying them all out and messing with them. I think I would enjoy it but then again I’m lazy
Has this affected your credit score? Opening so many?
Any credit score impact related to opening an account drops off after 6 months anyway.
I’ll try not to repeat my opinion of the scores themselves
Could have sworn I’d read somewhere that it was 3 months!
From my experience, this depends on the bank more so than how many you open, and also how frequent in succession you do this. If loads start popping up within the span of a month or two, brace for a temporary nose dive. It’ll recover after a few months assuming all other things are equal. Likewise if a bank decides to hard search you for no good reason, it will nose dive, again, things will recover and balance out fairly quickly.
Mine will at times dip from excellent to OK from opening a new account. It ticks back up to excellent quite quickly though.
Personally though, don’t worry too much about your credit score. It matters little as long as you have a good history of debt management. Affordability is the more stringent test.