Your checking account is meant for everyday spending. Many variables go into deciding how much money to keep there, from your daily expenses to bank account fees to your savings goals.
Let’s take a look at typical recommendations for checking account balances, key factors to consider and strategies to maintain the right balance for your financial life.
Why your checking account balance matters
Keeping too little in your checking account can lead to overdraft fees or declined payments. In 2024, 11 percent of adults with a bank account reported paying an overdraft fee in the prior year.
On the other hand, holding too much cash in checking can mean missed savings opportunities. The average checking account balance in the U.S. is often higher than what is needed for everyday expenses, yet these funds typically earn little or no interest. Excess money could be growing in a high-yield savings account or other investment.
How much money should you keep in checking?
A good general guideline for how much money to keep in your checking account is to have enough to cover 1 month of expenses plus a small buffer — typically between $100 and $500 — to protect against overdrafts and declined payments. This buffer may offer peace of mind when unexpected charges or timing issues arise.
That said, the exact amount varies by person. Consider your typical monthly bills, spending habits and how often you get paid. If you pay rent, utilities and other essentials monthly, make sure your balance reflects that and includes the buffer.
You might aim for one month of expenses plus $100 if you’re paid often and track your cash flow closely. If you have irregular bills or you’re paid less frequently, a $500 buffer may offer more breathing room. Ultimately, the goal is to keep your checking account balanced so you have access to funds when you need them.
Factors to consider when deciding your balance
When deciding how much money should you keep in your checking account, keep these key factors in mind:
- Monthly income and spending: Review your fixed bills and typical spending to estimate how much you need to cover at least 1 month of expenses
- Timing of bill payments and paychecks: If your bills come due before you get paid, a larger buffer could help you avoid overdrafts. Frequent pay periods may allow for a smaller balance
- Overdraft protection or linked accounts: Accounts with these features can cover shortfalls by pulling from savings, reducing the need for a large cushion
- Minimum balance requirements: Some accounts charge fees if your balance drops below a set amount, so factor in those thresholds when setting your minimum
- Access to emergency savings: If you can’t quickly tap into your savings for unexpected costs, you may want a bigger cushion in checking for peace of mind
Average checking account balance
The average checking account balance varies widely by age and income level. Younger adults often have lower balances, while older adults and higher-income households tend to hold more in checking. People with higher incomes generally maintain larger balances than lower-income households.
Still, the national average is not a perfect guide for deciding how much money you should keep in checking. The ideal amount for you is based on your income, spending patterns and financial goals.
Where to keep extra cash
After deciding how much money to keep in your checking account, you may want to move any surplus into accounts that can earn more while keeping your funds safe. All of these options are protected by FDIC insurance up to FDIC limits.
Savings accounts
Savings accounts typically allow you to earn interest on your funds over time. They may have monthly service fees or requirements you must meet to avoid them. For instance, at Citi, you’ll need to either maintain an average monthly balance of at least $500 or have a linked checking account to waive the monthly service fee.
Money market accounts
Money market deposit accounts often offer higher interest rates than traditional savings accounts. They may require a higher minimum balance but provide check-writing privileges or debit access like a checking account.
Short-term CDs
Certificates of deposit lock in your funds for a fixed term — sometimes as short as 3 months — at an interest rate that is typically higher than those offered by standard savings or checking accounts. Be aware that early withdrawals can trigger penalties, so CDs may be a good choice if you know you won’t need the money before the term ends.
Moving some of your money to one of these accounts may help keep your checking focused on transactions while putting extra cash to work in safe, interest-earning places.
Disclosure: This article is for general educational purposes. It is not intended to provide financial advice. It also is not intended to completely describe any Citi product or service. You should refer to the terms and conditions financial institutions provide for various products.
