Here's What Happens When You Try to Open Too Many Bank Accounts at Once

We all know that opening too many credit cards at once is a big no-no. It can screw up your credit report, which affects a lot in your financial life.

But what about opening bank accounts, like checking and savings? Is there any risk opening a bunch of accounts in a short period of time (to snag bonuses, higher APYs, or just spread your money around)?

Here's what actually happens behind-the-scenes when you try to open too many bank accounts, too quickly.

Most banks use ChexSystems (a background check for banking)

When you apply for a new checking or savings account, most banks work with a consumer reporting agency called ChexSystems.

ChexSystems is basically a background check for your banking history. It tracks things like overdrafts, unpaid fees, and even how many new accounts you've opened recently. Banks use this info to decide whether to approve or deny your application -- especially if you're opening multiple accounts in a short period.

It's important to note that ChexSystems doesn't approve or deny opening accounts directly. That's the bank's decision, and some banks scrutinize your history more than others.

Technically, there's no limit to how many bank accounts you can have

There's no law stopping you from opening 5, 10, or even 25 bank accounts. If you've got a good reason (plus the brainpower to keep them all organized), go for it.

In fact, there are plenty of valid reasons to maintain multiple accounts:

• FDIC insurance limits: Coverage maxes out at $250,000 per depositor, per bank. So if your balances exceed that, spreading your money across different banks can keep it fully protected.
• Higher APYs and interest: Some online banks consistently offer higher APYs than others, especially top high-yield savings accounts. Moving your savings to wherever the rate is strongest can help your cash grow faster.
• Budgeting purposes: Separate accounts can help you mentally divide your money -- like one for bills, one for fun, one for travel, and so on. It's a simple way to keep goals clear and temptation at bay.
• Welcome bonuses: Many banks offer cash bonuses for opening a new account and meeting certain requirements. If you're organized and follow the fine print, you can scoop up a few hundred dollars just for moving your money around.

Personally, I've opened about 10 bank accounts over the past couple of years. Some were for work and research, just to test out how things work behind the scenes. Others were purely strategic -- either to earn a juicy welcome bonus or to snag a better rate for my savings.