Keeping a separate account for bills

I’ve seen a few people here, and in our recent reviews, that keep a separate account for bills. Is that you?

Can you tell us more about why you do this, and whether it works, or if it just adds complexity?

It has become much easier to open multiple current accounts, and so there’s really no longer a need to worry about “switching” (i.e. closing the previous account and moving wholesale to a new account) unless you are concerned about balances or payments getting missed in the mix.

Does it help to have a separate account for different reasons: for bills, for going out, for travelling, for saving, etc.? Or is it better to keep things in one place to get organised?

If you have a separate account for major bills, what are the key features it offers, or is it just enough to have a dedicated account for this money so it is not spent?

I’m curious more than anything about emerging behaviour

I do this. 2 things that triggered it -

  • Joint account which is only used for bills
  • Did a switching offer that required me to switch direct debits - liked the way it worked enough to keep doing it.

Perceived benefits for me -

  • Helps keep me organised - each month I get paid, move money around, see what’s left (which I promptly save, honestly!)
  • Protection on top of direct debit guarantee - less money to be over-billed for / taken fraudulently
  • A degree more privacy. None of my monthly-income receiving bank’s business what proportion I spend on what. None of my bill-paying bank’s business how much I get paid.

That last one may of course cause problems securing overdrafts etc. I’m lucky to have a good credit history / couple of good overdrafts for emergencies so I don’t worry too much.

Starling have set a sensible bar here of £2/month - I think that’s about I’ll I’d hypothetically pay for ‘under one app’ separated accounts when secondary (and tertiary…)accounts are free elsewhere.

1 Like

I pay bills by direct debit standing order and card so an account that offers that separate from an account where you spend from is ideal the more accounts to have the more you are able to manage your money

1 Like

The uk is one of the only countries to have free banking as standard go to Ireland etc you pay monthly or quarterly fees and other fees one bank charges to do everything so is better to have less and use less depending on the bank

No, I don’t keep things separately for that reason.

However, I do end up with separate accounts, purely because the eligibility criteria of certain benefits set by some current account service providers.

I believe that money is fungible, which means the money in one account is identical to the same amount of money in another account, as long as the accessibility is the same, i.e. both are current accounts or easy access savings accounts. By keeping money in one place, I can ensure that they earn the highest possible returns. Okay, in reality, many places, because many of them have a fairly low maximum balance or contribution amount limit.

I do bookkeeping, and that helps me to allocate the money before I received them or spent them. I can see the remaining balance in my accounts on each day in the next month or so from the bookkeeping software, and the minimal balance of the salary account is the amount I will save in that month. Note that I spend on credit cards, so I don’t need to keep spending money in cash, and I’ll know exactly how much do I need to repay roughly a month in advance. My current accounts have zero or near zero (some DDs’ amount change slightly from month to month) balance except if they pay interest at a rate better than my cash savings accounts. I don’t really do budgeting, because that had never been an issue for me - a born compulsory saver.

1 Like

My main or “hub” account has quite a high balance from time to time (at least, high for me). The likelihood that someone will get hold of my debit card at just the right moment to clear out a stack of money is probably very low, but why take any risk when it’s so easy to open another account?

Also, however good you get categorising transactions, it’s still much more powerful to separate spending types by account. This is something bunq realised early on, but no one else has replicated.

I have a bills account which is seperate from my main account (the account in which I receive my income).

Main reason for seperate accounts is the bills account pays cashback on certain direct debits, but doesn’t have the features I’d like for it to be my main account. But I also think it makes life a bit easier to segregate money destined for monthly bills from the rest of my money, so I’d probably continue even if the cashback stopped. Transfers and payments are all automated via standing orders and direct debits so no complexity or hassle.

1 Like

this, I think, is the key element emerging as it gets repeated in different ways

if, like @Roman , you already have a separate way of managing your money, then you may not need it, but it seems that if we want to get some of this benefit, with less effort, then it is simple to visualise your two major balances, “regular bills” vs “discretionary spending”, by putting them in different accounts. This gives you two benefits; a better awareness of each balance, and friction to stop you spending from one instead of the other.

I can definitely empathise with this, even if I wouldn’t do it myself. I have multiple accounts for other reasons, but not to separate out bills. I’m similar to Roman in that I actually prefer to see money in one place and take most advantage (if any) of highest possible returns.

Very interesting insights so far, thank you all

1 Like

My wife and I have a few paying joint account for our bills. This ensures we both get the benefits and allows us to split our bills equitably as a proportion of our income.

We then use our individual accounts for our personal commitments (e.g. car, my wife doesn’t use mine so why should she pay for it) and our spending (could be meals out or buying records).

For us this just allows us to manage our finances in a way that feels equitable to each and leaves us both with enough personal money each month to be comfortable.

1 Like

thanks @Jaybyname that’s really interesting.

I can understand this from a spending point of view. When it comes to savings, do you do it individually, or jointly then? I’m interested to know how this would be managed ‘equitably’ in this scenario

We have an amount we class as a “bill” which gets put into our savings, we also both typically transfer whatever is left the next payday into our savings also - although this isn’t a “rule” just a habit we’ve both gotten into.

This is an approach that has worked well for us, although it’s only something we started during the pandemic, it’s allowed us to buy our first home together, furnish it and have enough left to decorate it once it’s dried out.