Chime is a financial technology company, not a bank. Banking services provided by The Bancorp Bank or Stride Bank N.A.; Members FDIC

Banking Basics

How Much Money Should I Keep in My Checking Account?

Depending on how much you keep in your checking account, you could risk overdrawing your account (if you don’t keep enough in there) or losing out on interest you could be earning elsewhere (if you’re keeping too much). Learn about the general rule of thumb when it comes to your checking account balance and what factors to consider when deciding where to store your money.

Stephanie Colestruck • June 30, 2022

Most financial experts recommend keeping a certain amount of money in your checking account from one month to the next. A checking account offers quick and easy access to your everyday funds, and having enough of those funds is important, especially to avoid unnecessary fees.

Keeping an eye on and maintaining your checking account balance also helps you stay on top of your finances and budget. But, you might not want to keep all of your cash in your checking account if you don’t need it, since it could be working for you elsewhere.

We’re here to walk through the different accounts you could be using, when it’s a good idea to move your money around, and how much to keep in your checking account.

In This Article

  1. How Much Money to Keep In Your Checking Account
  2. How Much Money Can You Have in a Checking Account?
  3. Is It Better to Keep Money in Checking or Savings?
  4. What to Do With Extra Money You Don’t Need in Your Checking Account
  5. Checking Account FAQs
  6. Final Thoughts

How Much Money to Keep In Your Checking Account

Your checking account balance should cover 1 to 2 months’ of expenses, plus a buffer, according to many experts. You should keep enough money in your checking account to cover any recurring monthly bills — like rent or mortgage payments, utilities, car payments, or your student loans — plus a little extra. (If you regularly get cash from an ATM, ensure that you have a large enough buffer for those withdrawals, too.)

You may be thinking, why do I need a buffer? Financial institutions make millions of dollars from overdraft fees charged to their customers. These fees can add up quickly if you’re frequently overdrawing your account, so having a buffer eliminates the chance of you losing that money.

Accessing your money in a checking account is quick and easy, and keeping your balance above the bare minimum will help you avoid those monthly maintenance fees. On the other hand, having a checking account that’s overflowing might mean you’re missing out on earning interest from a savings or retirement account. 

If you’re watching your balance climb continuously, you might consider putting the rest into a savings or other type of account, such as a certificate of deposit (CD), money market account (MMA), or another type of investment account. It’s also a good idea to consult with a financial advisor if you’re investing money for the first time.

Average Checking Account Balance

According to the Federal Reserve Survey of Consumer Finances, U.S. households had a median balance of $5,300 for different types of transaction accounts in 2019 (an 11% increase from 2016). Although, in this sense, transaction accounts refer to checking, savings, money market, call accounts, and prepaid debit cards, it still gives us an idea of what the average American has stashed away.

Note: The households with higher incomes significantly skewed the numbers when calculating the median balance.

When it comes to checking accounts, it’s safe to assume that most people have one, especially if they receive their monthly income regularly through direct deposit. But, the amount that each person keeps in their checking account will ultimately differ for a multitude of reasons, and it could come down to personal preference. Some people only like to keep the amount they need on a weekly or monthly basis to avoid overspending. Others view and use their checking account as a place to hold and save all of their funds. 

How Much Money Can You Have in a Checking Account?

Now, you may even be thinking, is there a limit on how much I can actually keep in my checking account at one time? Typically banks and credit unions don’t have maximum deposit limits on checking or savings. So let’s say you win the lottery and have to deposit a huge check (wouldn’t that be awesome?). You could go and deposit that money into your checking or savings account without any issues. However, there can be maximum deposit limits for other types of deposit accounts, such as certificate of deposit (CD) accounts or Roth IRA accounts.

Another question might be, do checking accounts have maximum limits on what you can deposit in a single transaction? The answer is yes, they can, but it depends on the bank. Just as banks usually don’t have a maximum deposit limit, they also don’t set limits on account balances. There is, however, a limit on how much of your money is protected by the Federal Deposit Insurance Corporation (FDIC). The FDIC insures bank accounts in the event of a bank failure (which is rare). As of 2022, the FDIC coverage limit is $250,000 per depositor, per account ownership type, per financial institution. 

If you have more than one account at the same bank and the balances together exceed $250,000, then it’s possible that part of your deposits might not be covered. The FDIC offers an online estimator tool that you can use to calculate how much of your deposits are covered at your bank. But, at the end of the day, it might make sense to put that extra cash in a bank account where it will earn interest (which we’ll get to in a little bit).

Is It Better to Keep Money in Checking or Savings?

Now that you know the general rule of thumb for how much to keep in your checking account, a good question still is if you should keep any extra funds in your checking or savings

To figure out what method will work best for you, track your spending for a few months to find out how much money should be in your checking account at one time. Include your routine purchases and payments that are automatically deducted from your checking account.

As we now know, keeping 1 to 2 months’ worth of living expenses plus a buffer in your checking account at a minimum is ideal, so it’s advisable to have both types of bank accounts. You can use a checking account for spending and paying off expenses and use a savings account to build and hold your additional funds while earning interest.

You can often open a savings account at the same bank that offers your checking account. This makes it easy to transfer money back and forth as needed, and can also act as an overdraft buffer. 

Another option is to open a savings account at another bank, such as an online institution. While transfers may take a bit longer, this can be a smart way to snag a higher interest rate on a high-yield savings account.

What to Do With Extra Money You Don’t Need in Your Checking Account

If you feel like you have too much money in your checking account but are wondering what to do with your extra cash, we got you covered! 

1. Put it in a high-yield savings account

While some checking accounts offer interest on the balance, it’s not usually a very competitive rate. You’ll get the highest returns from a dedicated savings account, especially a high-yield savings account or MMA.

The average checking account interest rate is 0.03%, according to the FDIC, but you can earn 0.50% annual percentage yield (APY) by opening a High Yield Chime Savings Account

2. Start an emergency fund

Creating an emergency fund is one of the next best things you can do for your finances if you have extra money to save. Experts generally recommend keeping 3 to 6 months’ worth of living expenses in your emergency fund for unexpended expenses or events, such as a loss of a job. You can also keep this emergency fund in a high-yield savings account as well, so it can earn you interest while it sits!

3. Pay down debt

If you have extra cash outside of your monthly expenses and you have any debts, think about putting those additional funds toward any credit card or loan payments. Even if it’s an extra payment or bringing your balances down a little, it will help your overall financial situation and give your credit score a boost!

Without a goal for your money, it can be easy to let it just sit in your checking account. By creating specific plans for your savings, though, you can not only make moves toward your future, but also put your money to work for you in the process.

Checking Account FAQs

How often should I move money from checking to savings?

How often you move money from your checking to your savings is essentially up to you. To make it easy, you can set up an automatic transfer to shift money from checking to savings once a month, weekly, or on whatever schedule works for you and your monthly cash flow. These transfers are predictable and can be budgeted for, and you can make changes at any time.

Open a Chime Checking Account where your debit card purchases are rounded up to the next whole dollar¹ each time you swipe your card to make a purchase!

How much money do I need to open another bank account?

Many banks will have minimum deposit requirements in order to open a new checking or savings account. This minimum deposit will vary from one bank to the next, and even depends on the type of account you open. Most banks also have monthly maintenance fees, so be sure to watch out for those as well.

However, you can also open a bank account with no money. There’s no minimum deposit requirement when you open a Chime checking account, for instance, so you can put as little (or as much!) in your account as you’d like.

What is considered a safe amount to keep in my checking account?

If you always want to play it safe when it comes to your checking account, keep at least 1 to 2 month’s worth of expenses in there. If you’re prone to overspending, just keep the exact amount of money needed to cover that current month’s expenses, with a few extra dollars for a cushion. Unless your bank has a minimum balance requirement, you don’t need to worry about certain thresholds. On the other hand, if you’re prone to overdraft fees, keep that little cushion as a priority for yourself. 

Final Thoughts

How much money to keep in your own checking account depends on your personal finances, monthly expenses, and spending habits. By utilizing more than just a checking account, you can prevent overdrafts, meet some other financial goals, and even earn a little extra along the way.

Chime is a financial technology company, not a bank. Banking services and debit card provided by The Bancorp Bank or Stride Bank, N.A.; Members FDIC. Credit Builder card issued by Stride Bank, N.A.

While Chime doesn’t issue personal checkbooks to write checks, Chime Checkbook gives you the freedom to send checks to anyone, anytime, from anywhere. See your issuing bank’s Deposit Account Agreement for full Chime Checkbook details.

By clicking on some of the links above, you will leave the Chime website and be directed to a third-party website. The privacy practices of those third parties may differ from those of Chime. We recommend you review the privacy statements of those third party websites, as Chime is not responsible for those third parties' privacy or security practices.

Opinions, advice, services, or other information or content expressed or contributed here by customers, users, or others, are those of the respective author(s) or contributor(s) and do not necessarily state or reflect those of The Bancorp Bank and Stride Bank N.A. (“Banks”). Banks are not responsible for the accuracy of any content provided by author(s) or contributor(s).

1 Round Ups automatically round up debit card purchases to the nearest dollar and transfers the round up from your Chime Checking Account to into your Savings Account. Save When I Get Paid automatically transfers 10% of your direct deposits of $500 or more from your Checking Account into your Savings Account.

© 2013-2022 Chime. All Rights Reserved.