How Much Money Should I Keep in My Checking Account?

Authored By: Community Financial Credit Union on 11/12/2019
Most of us use our checking accounts on a daily basis. Every swipe of a debit card, every bill we pay, and every personal check we write takes money out of our checking account.

But how much money should we be keeping in these super convenient accounts? Let’s find out.

What’s your Magic Number?


It’s best to have one to two months’ of living expenses in your checking account at all times. Some experts suggest adding 30 percent to that for an extra cushion.

To determine your exact living expenses, track your spending over several months, including all bills and discretionary spending.


Why Keep that Much Money in your Checking Account?

Here are three reasons you want to keep your checking account well-padded at all times:
  1.  Avoid overdrafts. Even high-income earners can miscalculate their spending and end up with an overdrawn account. Why risk being charged overdraft fees for every transaction when you can easily avoid them? Community Financial can also help you with this issue by offering Overdraft Protection to ensure you never have to pay extra fees for an overdrawn account.
  2. Provide a cushion for pre-authorization holds. Some merchants place a pre-authorization hold on your debit card until the transaction completes. These holds can reduce your available checking account balance by up to $100 (and sometimes more!) per hold. Keeping your account well-funded allows you to comfortably accommodate these possible holds without fearing a negative balance.
  3. Keep liquid funds available. A robust checking account means access to cash is just an ATM transaction away.

Can I be Keeping Too Much Money in my Checking Account?

In the past, having an overstuffed checking account may mean you’re missing out on higher returns you can earn if you were to keep those same funds in a Community Financial Money Market Accountor a Share Certificate. But that isn’t your only option.


With Community Financial’s new Premier Checking, earning more interest on your money is easier than ever before. By doing what you’re already doing, you can earn 3.00% APY (annual percentage yield) on balances in your Premier Checking up to $7,500! It’s time to earn you more so you can do more. Speak to one of our financial representatives or pop over to our Premier Checking web page to learn more today!

Your Turn: How much money do you keep in your checking account? Tell us what works for you in the comments.


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