Why You Should Use Multiple Bank Accounts

Many people who successfully manage their finances use multiple bank accounts to do so. Here are some of the benefits and advantages of doing so.
* Seperate Money for Bills from Slush Funds

To handle your money (and particularly your credit rating), it is essential that you know you can pay your bills completely and on-time. When you receive your pay-check or other regular income, ensure that you immediately get your slush-funds transferred into a seperate account which you then draw upon for day-to-day costs. This will leave your bills money safely tucked away in an account which you do not access on a normal day, and you can ensure that the money will be there for when the bills come in.
* Pay All Bills using Automated Transfers

If you know that each month, you have exactly the money you need to pay your bills, then use automated transfers (direct debits, standing orders, etc) to transfer the money from your bills account once per month, without you having to do anything about it. If you can make this account fully automated, so ALL your bills are paid without your intervention, then you wil be well on the road to being able to take charge of your finances.
* Manipulate Interest Rates on Overdrafts

If you have an overdraft, then it makes sense to make any interest charges on that as low as possible. So, you could you have your income going to an account in one bank, which provides better interest savings (you are using internet banking, aren't you?). Then you could transfer your slush fund money into an account which charges low interest rates for when you are overdrawn. This latter account could be in a different bank altogether.
* Aid Your Concentration

If all your living expenses and bills are automatically handled, and seperate from your slush funds, then you can forget about them, leaving your mind clear to concentrate on the money that flows in and out of your hands each day. Often, it is this (literal) cash flow that causes people who have been having financial difficulties, not the payment of bills. Usually, getting control of day-to-day expenditure is the biggest single difference you could make to your financial health, and if you can place all of your concentration on this specific section of your finances, rather than having to juggle monthly bills, shopping, travel costs, unexpected bills, and so on, you can make great advances in your behaviours.
* Define Your Net Worth Each Month

By paying all your bills from one account, you will develop much more clarity over how much you earn, how much you need to barely survive, and how much you use on the little luxuries of life. (I know, a new suit or a new dress is absolutely essential right now - but couldn't you do without it for just another month???)

On a personal note, this is the one thing I have done that has made the biggest difference in my own financial history. All my bills are paid, on time, and in full. Yes, there is a move towards unified accounts on some areas, where your mortgage, savings, and current account are all in one account, thus increasing the interest you earn to the maximum, but doing this could result in more difficulties if you cannot juggle your finances correctly. Get back on your feet first, then learn to run! nnnn