Life can be complicated. You’re trying to balance your work life with your home life, and keeping up with bills can sometimes be a challenge. It can be helpful to set up a separate account for paying your bills, especially if you’re self-employed. It can also be helpful if multiple members of your family are contributing to your household finances.
Advantages of a Separate Account
Keeping track of your bills is essential to staying on budget. When you open a separate account for paying bills, it allows you to easily track your household’s spending. If you’re self-employed, this allows you to keep your business expenses separate from your household expenses. If you have multiple family members contributing income, each member can transfer funds into the account and then all the bills can be paid from one place. You don’t have to wonder who paid the cell phone bill this month or whether the mortgage was paid on time if all the bills are being paid from one account.
Decide on a Bank Account
To easily pay your bills, you’ll need to open a checking account. Checking accounts typically offer unlimited deposits and a large number of withdrawals per month. When you’re looking for a checking account to open, look for accounts with low-or-no monthly fees. Some banks will waive fees if you make direct deposits or keep a certain balance in your account. Some checking accounts will pay interest, but these accounts typically require a minimum balance. If you’re frequently paying bills, it might be difficult to keep your balance at a certain level.
You also need to decide whether to open an individual account or a joint account. With a joint account, both account holders can access the account information and withdraw funds from the account. Depending on the bank’s features, even if you have an individual account, others may be able to transfer money to you online that you can deposit into your account.
When you’re deciding on a checking account, another important consideration is the bank’s overdraft policies. Even if you keep careful track of your checking account, mistakes can happen. You may be able to connect another account at the bank, such as a savings account, to your checking account. If you’re about to overdraft, the bank will transfer funds from your savings account to your checking account. You may also be able to open a line of credit that can be used in case you overdraw your account.
Open the Account
You can open bank accounts online or in person. You will need to confirm your identity with a driver’s license or other state identification as well as your Social Security number. The bank will check your credit history and your banking history and make a decision regarding whether you can open the account. Once you’re approved, you may need to make an initial minimum deposit to open the account.