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How Much Should You Keep in Your Checking Account?
Try to keep a monthly balance and a small buffer in your checking account.
Checking accounts are one of the most useful deposit accounts out there — they come with a debit card for spending and let you set up direct deposit and pay bills. But how much should you keep in these accounts?
What should my checking balance be?
As a general guideline, you should keep enough in your checking account to cover your monthly expenses — like rent, utilities, groceries and other bills — plus a buffer for unexpected costs. A good rule of thumb is to keep a cushion of one to two months’ worth of expenses. This approach ensures you have quick access to funds and peace of mind.
In addition to your cash cushion, here are some things to consider when deciding how much to keep in your checking account.
Average checking account balances
The median balance for US transaction accounts, which include checking accounts, was $8,000 in 2022, according to the Federal Reserve’s Survey of Consumer Finances (SCF). The average balance in those accounts was $62,410. These figures highlight wide variation influenced by income, age and other demographic factors.(1)
The SCF also noted that households with higher incomes tend to keep larger amounts in their accounts for convenience and security. This data highlights the importance of tailoring your checking account balance to your unique financial situation, as expenses and income vary significantly per person.
Avoid minimum balance fees
Some checking accounts charge fees if your balance drops below a certain threshold. For example, the Chase Total Checking account requires a $1,500 minimum balance to avoid the monthly $12 fee.
To avoid these charges, keep your balance consistently above the minimum required. Be sure to check your bank’s specific policy, as the minimum balance requirements can vary by account type.
Emergencies
Not to be confused with your emergency fund — typically three to six months’ worth of expenses kept in a savings account — you can also keep extra funds in your checking account for more immediate access to your cash.
Since savings accounts aren’t as easily accessible, having funds readily available through your debit card can be helpful. On top of the numbers you’ve calculated so far for your checking balance, you can consider adding about $1,000 for common emergency expenses like car repairs, home repairs or medical bills. You can adjust this number based on your specific needs.
Is it possible to keep too much in your checking account?
If you have more than $250,000 in a checking account, you run the risk of not having all your funds covered under FDIC or NCUA insurance. Most institutions only have insurance up to that point per depositor, so consider spreading your funds out so things are covered.
Additionally, keeping too much in a checking account may result in opportunity costs.
Checking accounts don’t typically earn interest, so excess funds could be better used elsewhere. A high-yield savings account (HYSA), for example, can offer high interest rates for short-term savings. You can consider keeping emergency savings in this account — typically advised to be at least three to six months’ worth of expenses.
For long-term goals, investments like index funds or exchange-traded funds (ETFs) offer the potential for higher growth, albeit with some risk. Consider limiting your checking account balance to routine and unexpected expenses so you can allocate extra funds toward opportunities for greater returns.
What about hybrid accounts?
Hybrid accounts combine features of checking and savings accounts into one product. These accounts typically offer benefits like earning interest on your balance, fee-free transactions and access to tools for spending and saving. For example, SoFi® provides higher interest rates on savings balances while also offering a checking account with a debit card and unlimited access to over 55,000 ATMs worldwide.
The main advantage of hybrid accounts is convenience — keeping your spending and saving in one place. They can also help you earn interest on funds that would otherwise sit idle in a traditional checking account. However, a potential drawback is the lack of physical branches, as many hybrid accounts operate primarily online. Be sure to review the terms to ensure the account aligns with your financial goals.
6 tips for managing a checking account balance
Here are some practical tips to help you maintain a healthy balance while minimizing fees and maximizing financial efficiency:
- Set low-balance alerts. Enable notifications to get an early warning when your balance drops below a certain amount. These balance alerts help avoid overdrafts or insufficient fund issues.
- Automate bills and deposits. Schedule automatic payments for recurring bills and set up direct deposits to ensure timely transactions and a steady cash flow.
- Choose accounts without overdraft fees. Opt for accounts that waive overdraft fees or offer overdraft protection to avoid unnecessary charges.
- Regularly review your transactions. Monitor your account activity to catch errors, track spending habits and identify opportunities to save.
- Maintain a cushion. Keep extra funds in your account as a buffer for unexpected costs on top of your expenses.
- Transfer excess funds. Move surplus money to a high-yield savings account or other investments to maximize interest or returns.
Compare top checking accounts
Narrow down top checking accounts by monthly fees, deposit requirements and perks. For a better comparison, tick the Compare box on up to four options to see accounts side by side.
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What is the Finder Score?
The Finder Score crunches over 300 checking accounts from hundreds of financial institutions. It takes into account the product's monthly fees, overdraft fees, opening deposit, customer support options, ATM network and features — this gives you a simple score out of 10.
To provide a Score, Finder’s banking experts analyze hundreds of checking accounts against what we consider is the best option: no monthly fees, no overdraft fees, a large ATM network of 50,000 or more, additional features outside of typical banking services, and the optional perk of earning interest. Accounts that are nearly free to maintain and use are scored the highest, while accounts with costly fees and few features are scored the lowest.
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