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Experts: Here’s How Much You Should Have in Your Checking Account

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Checking accounts are the bedrock of personal finance in the United States. According to a recent GOBankingRates survey of 1,000 adults from all over the country, more than 91% of America has a checking account, the highest percentage among all account types. However, more than one-third of those surveyed say they barely keep any money in checking at all.

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See: Here’s How Much Americans Have in Their Savings Accounts in 2023
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GOBankingRates talked to experts who were stunned by the study’s findings, as well as some who thought it sounded just about right. Here’s what money professionals think is the appropriate amount of cash to keep liquid and at the ready in a checking account.

A Hundred Bucks? That’s It? 

The study found that 37% of the country — more than 1 in 3 Americans — keep a balance of $100 or less in their checking accounts at any given time. 20% of respondents keep a balance of $101-$500 in their checking account, while 14% keep a $501-$1,000 balance. Only 10% of people maintain a balance of $1,001-$1,500, and an even smaller percentage (5%) keep a larger balance of $1,501-$2,000. The final 14% keep a healthy balance of over $2,001 in their checking account.

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If you think that a double-digit account balance for one-third of the country sounds insufficient, you’re in good company. “It honestly surprises me that the number is so low,” said Julie Ramhold, consumer analyst with DealNews.com. “I would expect many to be putting the bulk of their income into a checking account still.” 

So, if $100 or less is low, where is the sweet spot? 

“The short answer is that most experts advise keeping one to two months worth of living expenses in your checking account,” Ramhold said. “It’s also good to pad out that number with an extra 25% to 30% of your monthly living expenses as an extra cushion.” 

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Some, on the Other Hand, Think That Less Is More 

Not all experts were shocked by the study’s findings — in fact, at least one thinks the results are right on the money. 

“I keep less than $100 in my checking account for several reasons,” said Wendy Barlin, CPA. 

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The first argument in favor of an ultra-low balance is that checking accounts earn zero interest or, in the best of cases, close to it — but Barlin cited another point that’s equally convincing. 

“Checking accounts are linked to debit cards, which are the biggest fraud problem,” Barlin said. “I don’t want someone taking money out of my checking account. I keep all my money in a savings or money market account.”

It is, after all, much easier to get credit card companies to reverse fraudulent charges than it is to get banks to return cash. 

The Right Amount Is… There Is No One Right Amount

As you can see, the spectrum is so broad that it ranges from $100 to two months’ worth of living expenses plus another 30% — and that’s after speaking to only two experts. Some even said you should have up to six months on hand. 

A consensus is elusive, of course, because everyone’s life and financial footprint are unique.  

“How much you should keep in your checking account depends on various factors, such as your income and expected expenses, recurring bill payments and cash withdrawals,” said Laura Adams, MBA and personal finance expert with Finder.com

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Another reason that the “right amount” is so hard to nail down has to do with the transitory nature of money held in checking accounts. Checking accounts are a temporary way station for money that will be redirected to pay credit card bills, fund investment accounts and IRAs, and settle up for the month with the mortgage lender.

“Most people deposit income into their checking and make disbursements from that central account for everyday expenses and savings,” Adams said.

One school of thought says that the right amount is whatever you need to cover your expenses — and not much else. Whatever’s left over, after all, could be put to better use elsewhere.

“Since interest earnings on bank accounts are typically a fraction of 1%, keeping large sums in a checking account isn’t a wise option,” Adams said. “Moving excess money into higher-yield savings allows you to earn more interest and maintain a separate fund for emergencies.”

There’s even an argument to be made for putting that money in an index fund since savings yields aren’t much better than checking yields, but if you are a checking account minimalist, remember that it’s better to have a little too much money than not enough. 

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The Fee Trap Waits for Those Who Cut It Too Close

While you don’t want too much money idling in checking when it could be earning you money somewhere else, a healthy cushion of cash is an absolute must if you want to avoid the significant penalties that come with maintaining an underfunded checking account. 

“As a general rule of thumb, your goal should be to maintain a balance that helps you to avoid the risk of becoming overdrawn or incurring bank fees,” said Maxim Manturov, head of investment research at Freedom Finance Europe, a subdivision of Nasdaq-traded Freedom Holding Corp. “With this in mind, your account should never drop below your minimum required balance, so it’s important to consider your expenses accordingly, as well as your general monthly outflow.” 

Regulation D: Use Savings as a Failsafe — But Only Sparingly

It’s likely that part of the reason people keep so little money in their checking accounts today is that low balances aren’t as dangerous as they once were. Most banks let you transfer money instantly from savings to checking if things get tight — even after hours — or you can set up overdraft protection that moves money automatically from savings to checking to cover a debt in progress. Those are all incredibly helpful tools that would have seemed like magic a generation ago to anyone who ever wrote a check that they didn’t realize they couldn’t cover. 

Earn Perks With A New Checking Account

But unlike checking accounts, the money you put in savings was not designed to be transitory. That money is supposed to stay put, and if you overuse your savings account as a backstop to your checking account, you’ll start incurring penalties. That’s because Federal Reserve Board Regulation D forbids you from making more than six withdrawals from a savings account per month.

The Nature of Banking Is Changing

Technology has forced a generational divide in banking habits and attitudes. In a world of crypto wallets and Venmo, paper checks — and the accounts they’re linked to — have taken on a very 20th-century feel. Many young people have never written a check and have certainly never used longhand arithmetic to balance a checkbook, which is by now the financial equivalent of cursive. In fact, the same survey mentioned above found that 45% of Americans of all ages haven’t written a physical check within the last year.

Older people tend to favor the security of having plenty of cash “on hand” in their checking accounts, while younger generations tend to view all their money as being on hand all the time. With 24/7 access to PayPal, p2p payments, buy now, pay later purchasing options, and nearly instant transfers from brokerages to banks, why should they fret about the balance in their checking accounts?

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“In the height of the information age, people are getting smarter about personal financial wellness,” said James Dunavant, MBA. “Naturally, their preferences are also shifting toward more transparent platforms that offer faster, simpler and more personalized services. Rather than keeping their money in a checking account, consumers are exploring other options that provide greater benefits, whether it’s increased convenience, speedier processing, more rewards or fewer hidden fees. The next generation, in particular, has a deeper understanding of the wide breadth of financial tools that are available to them, and they’re willing to do the extra research to move their money into the best money management services, platforms and apps that make sense for their individual needs and goals.”

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Methodology: GOBankingRates surveyed 1,000 Americans aged 18 and older from across the country on between December 7 and 12, 2022, asking nineteen different questions: (1) What category does your current financial institution fall under?; (2) Have you considered changing Banks within the past year?; (3) If you have considered changing banks in the past year, were any of the following factors? (select all that apply):; (4) Which feature, perk, or other offering is most important to you when opening an account with a new institution?; (5) Are you currently satisfied with all your banking products and services offered by your Bank/Credit Union?; (6) Would you ever have different types of accounts across multiple banks? (i.e. Checking at Chase, but Savings at TD Bank); (7) What is your most preferred method of banking?; (8) Which of the following is the biggest factor of you staying with your current bank?; (9) Which of the following bank accounts do you currently use/have open? (Select all that apply); (10) How much is the minimum balance you keep in your Checking Account?; (11) How much do you currently have in your Savings Account?; (12) What amount of a sign up bonus would make you consider switching banks?; (13) Have you considered using any app-only banking platforms (aka neobanks) in the past year (e.g. Current, Upgrade, Chime, Dave, etc.); (14) How important is it to you for your bank to be affiliated with a crypto exchange/platform?; (15) In the past year how often have you written a physical check?; (16) When was the last time you visited your bank in-person?; (17) Why would you choose to visit your bank in-person? (Select all that apply); (18) When you think about banking, do you think of it as something you need or don’t need?; and (19) What services/products do you expect from your Bank and/or Credit Union? (Select all that apply). GOBankingRates used PureSpectrum’s survey platform to conduct the poll.