How Much Money Should I Keep In My Checking Account?

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A checking account is an important financial tool that can make paying bills and managing your finances a lot easier. Yet, if you keep either too much or too little cash in your checking account, you could run into trouble.

The following guide will help you determine the right amount of money to maintain in your checking account and avoid problems when splitting your cash between your checking account and other deposit accounts that offer higher interest rates on your savings.

Average Checking Account Balance

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The average quarterly checking account balance in the United States ranged between $6,700 to $25,000 as of Q2 2022, according to data from the JPMorgan Chase Institute. According to its research, the highest income families had average balances that were between three and four times higher than families with the lowest incomes.

However, when you look at average quarterly checking account balances, it can skew the results. Some households, after all, have bank account balances that are quite large compared to others.

Instead, it can be helpful to consider median weekly checking account balances for a more accurate picture of what’s happening in the finances of American households. According to the JPMorgan Chase Institute, the median weekly U.S. checking account balance in Q2 2022 ranged from under $1,300 to just above $7,000.

The Federal Reserve’s 2019 Survey of Consumer Finances (SCF), the most recent data available, also shares helpful information on this subject. According to the survey, the conditional median transaction accounts balance (e.g., checking accounts, savings accounts, money market accounts, prepaid debit cards, and call deposit accounts) in 2019 was $5,300. More than 98% of consumers had at least one type of transaction account at the time of the survey.

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Finding the Right Checking Account Balance for You

Understanding how much the average person keeps in their checking account can be helpful information. But it’s important to examine your personal budget and financial goals to determine the ideal amount to keep in your checking account. Your income and expenses also play significant roles in helping you find the right balance of cash to keep in your checking account and the money you should direct to other places.

In general, checking accounts don’t offer the highest interest rates available. Although, some of the best checking accounts may feature higher annual percentage yields than the competition. Therefore, many financial professionals recommend putting enough money in your checking account to cover your bills and living expenses for one to two months at most.

You may also want to add a checking account buffer for unexpected expenses. A checking account buffer can be a fixed amount of money, like $500 or $1,000, depending on the size of your household. Others prefer to make their buffer a percentage of their monthly expenses (e.g., 20%-30%).

It’s also important to pay attention to any checking account minimums that your bank may impose. For example, your bank or credit union might require you to maintain a certain average daily balance to avoid certain bank fees like a monthly maintenance fee. Of course, if you open a free checking account, you won’t have to worry about such expenses.

What to Do With the Rest of Your Cash

Once you figure out the right amount of money to keep in your checking account for bills, variable expenses, and a buffer for unexpected expenses, it’s wise to make a plan for the rest of your money. Of course, if you owe high-interest debt like credit cards, you’ll want to work toward paying down those balances as aggressively as you can.

It’s also important to create a healthy emergency fund to serve as a financial safety net. You’ll typically want to store your emergency fund somewhere besides your checking account, such as a high-yield savings account or a money market account. And you might even want to store your emergency savings with a different financial institution.

Once you have your debts under control and a handle on your emergency fund, it’s wise to branch out and look at other savings goals as well. You can use other deposit and investment accounts to try to maximize your money’s growth potential.

Recommended High-Yield Savings Accounts

Bank Account	APY	Features	Learn More
UFB Direct Secure Savings Account Open Account	5.25% More Info UFB Direct breaks balances into five tiers, but, currently, there is only one interest rate.	No minimum deposit No monthly fee	Open Account
SoFi Checking and Savings Open Account	0.50% - 4.60% More Info Customers earn 4.60% APY on savings balances when they set up recurring monthly direct deposit of their paycheck or benefits provider via ACH deposit. Alternatively, deposit at least $5,000 each month to earn 4.60% APY on your savings balance. Checking balances earn 0.50% APY	No minimum deposit No monthly fee	Open Account
CIT Bank Platinum Savings Account Open Account	5.05% More Info Earn 5.05% APY on balances over $5,000. Balances of less than $5,000 earn 0.25% APY. Annual Percentage Yield is accurate as of July 27, 2023. Interest rates for the Platinum Savings account are variable and subject to change at any time without notice.	$100 minimum deposit No monthly fee	Open Account
CIT Bank Savings Connect Account Open Account	4.65% More Info Annual Percentage Yield is accurate as of July 27, 2023. Interest rates for the Savings Connect account are variable and subject to change at any time without notice.	$100 minimum deposit No monthly fee	Open Account

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How to Choose a Bank Account

When you’re looking for a bank or credit union to work with, it’s important to find a financial institution that’s a good fit for your specific needs. To help figure out the priorities you’re looking for in a financial institution, you can ask yourself the following questions.

• Do you want a bank or credit union that charges few fees? 
• Is in-person banking important to you? 
• Are you hoping to earn a competitive APY on your deposit account balances? 
• Would you like to earn a bank account bonus when you open a new account?

Once you identify your banking priorities, it should be easier to start the comparison process. For example, you’ll know to avoid considering the best online banks if you have your heart set on opening a bank account that offers in-person branch banking services to its customers. However, if you are more concerned about avoiding fees and earning the best interest rates possible, you’re likely to take a different approach with your research.

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Bottom Line

Figuring out a comfortable checking account balance for your budgeting needs is a personal decision. And you shouldn’t be afraid to try different budgeting approaches until you figure out the best method for you and your household.

If you find that you transfer more money to your savings account than you’re comfortable with in one month, you can always adjust your strategy moving forward. Just keep a close eye on your checking account while you’re in the trial phase to make sure you don’t overdraw your account until you find a system that works well for you.