How Much Money Should I Keep in My Checking Account?

Not sure if you’re keeping too much money in your checking account? Here are some times you may want to consider transferring funds to another account (such as savings) instead:

1. You’re not earning much interest.

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.

Pro Tip: while the average checking account interest rate is 0.03%, according to the FDIC, you can earn 0.50% APY by opening a Chime Savings Builder account. That way, the cash you aren’t actively using to cover monthly expenses can earn you extra money while it waits.

2. Your account is growing each month.

If your average checking account balance is climbing steadily month over month, especially if your expenses aren’t dropping, you may need to start moving money to another account.

Pro Tip: Your checking account balance should cover one or two months’ worth of expenses, plus a buffer that makes you comfortable. But if you’re watching that balance climb continuously, consider transferring more into an interest-bearing savings account.

3. You don’t have any plans for your money.

Without a goal for your savings, it can be easy to let money 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.

Pro Tip: Make sure to build a solid emergency savings, save for important financial goals (like the down payment on a home), and contribute to things like retirement accounts. If you’re falling short with any of those goals, set up automatic transfers from your checking account each month.