Opportunity Cost: Keeping a large amount of money in a bank account may prevent you from investing in higher-return opportunities, such as stocks, bonds, or real estate. Fees: Some banks charge monthly maintenance fees, transaction fees, or penalties for withdrawing funds, which can diminish your savings.
No, it's completely fine. You're supposed to keep checking low because all your large sums of cash should be in at the bare minimum a savings account but even moreso in bonds, stocks, securities, mutual funds, etc.
Keeping too much in your checking account could mean that you're leaving money — even a little — on the table. Financial planner Marci Bair of Bair Financial Planning in San Diego says for anyone with a steady income, she recommends keeping "no more than about two months of expenses" in checking at any given time.
Checking account: 1 to 2 months of expenses
“Since your checking account is the 'operating' account that bills are paid out of, our recommendation is one to two months of expenses,” Anderson says.
Banks, building societies and credit unions
Joint accounts are eligible for FSCS protection up to the same limit of £85,000 per eligible person. We also protect certain qualifying temporary high balances up to £1 million for six months from when the amount was first deposited.
The average (mean) household checking account balance was $16,891 in 2022. The median household checking account balance was $2,800 in 2022.
For all the security surrounding banks, a checking account balance only has $250,000 of FDIC insurance if the bank fails. Any amount over that is not protected. By keeping an excessively large sum in a checking account, customers were needlessly putting their money at risk.
The amount of money millionaires keep in their checking accounts depends on personal preference. While some millionaires may keep six figures in their checking account to maintain a comfortable cash cushion, others may choose to keep the bare minimum in checking.
Another reason to cap the cash in your checking account is to protect it. The Federal Deposit Insurance Corporation (FDIC) insures funds in deposit accounts up to $250,000 per depositor, per FDIC-insured bank, per ownership category.
Savings accounts — especially high-yield savings accounts — typically offer higher annual percentage yields (APYs) than checking accounts, allowing you to grow your money faster. When looking for a savings account, consider these key factors: APY: The higher the APY, the more money you'll earn in interest.
Even with a cushion, Cole recommends keeping no more than two months of living expenses in your checking account.
How much is too much? The general rule is to have three to six months' worth of living expenses (rent, utilities, food, car payments, etc.)
Not necessarily. Money in a checking account is easy to access, and keeping balances above the bare minimum can help you avoid monthly maintenance fees. But having a bloated checking account means you're missing out on higher returns in a savings or retirement account.
Financial institutions are required to report large deposits of over $10,000.
Generally, it takes two to five business days to get all the funds from a check into your account. However, some factors might hold up the check-clearing process, like the status of your account or the place where you deposited the check.
Your money is at risk
But FDIC insurance only covers up to $250K of your balance (per individual, per account). Any additional funds over $250K are at risk. You may want to spread those funds between multiple FDIC accounts to ensure that your money is fully protected in case of a bank meltdown.
Someone who has $1 million in liquid assets, for instance, is usually considered to be a high net worth (HNW) individual. You might need $5 million to $10 million to qualify as having a very high net worth while it may take $30 million or more to be considered ultra-high net worth.
Most experts suggest keeping one to two months' worth of expenses in your checking account at all times. For example, say you have $5,000 in bills every month. That means you'd want to consistently keep $5,000 to $10,000 in your checking account.
Generally, there's no checking account maximum amount you can have. There is, however, a limit on how much of your checking account balance is covered by the FDIC (typically $250,000 per depositor, per account ownership type, per financial institution), though some banks have programs with higher limits.
So while having some extra cash on hand can provide a sense of security and flexibility, holding onto too much can have potential drawbacks. Be sure to consider factors like interest rates, investment opportunities, and personal financial goals in order to determine the appropriate amount of cash to hold onto.
How often can I deposit $9,000 cash? If your deposits are for the same transaction, they cannot exceed $10,000 per year without reporting. Although the IRS does not regulate how often you can deposit $9,000, separate $9,000 deposits may still be flagged as suspicious transactions and may be reported by your bank.
Those will become part of your budget. The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
Savings accounts generally will beat checking accounts when it comes to interest rates. Many banks will offer different levels of savings accounts with higher interest rates as the minimum daily balance grows.
The median savings account balance for all families in the U.S. was $8,000 in 2022. Generally, higher-income earners and older individuals save more than younger ones. Some experts suggest three to six months' living expenses as a goal.