How Much Cash to Keep in Your Checking vs. Savings Account

Aim for about one to two months’ worth of living expenses in checking, and another three to six months' worth in savings.

Alice HolbrookApril 24, 2019

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The more cash in your checking account, the better, right? 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.

The average checking account balance among Americans with checking accounts was about $2,900 and the median was $1,250, according to a 2019 NerdWallet survey, conducted online by The Harris Poll. The right number for you might be higher or lower. It's all about finding out what works for your budget.

Here’s a quick look at how much cash to keep in your checking and savings accounts.

Track your monthly spending

Start keeping a daily spending log for three months to find out how much money should be in your checking account. Include credit card purchases and payments that are automatically deducted from your checking account, like gym membership fees or loan payments.

Keep 1 to 2 months’ worth of living expenses plus 30% in your account, based on the spending log. Why? Banks earn billions of dollars from fees charged to customers who overdraw on their account or bounce a check. And running afoul of minimum balance requirements could mean being charged a monthly fee by your bank — so it’s best to have a buffer.

Track your spending the easy way

Throw away your paper budget and sign up for NerdWallet to make managing your money easy.

Put additional cash somewhere more profitable

Now that you’ve arrived at how much you’ll keep in your checking account, direct anything extra someplace where it can earn interest. Online-only banks tend to offer the best rates on savings, including annual percentage yields around 1%. That is significantly higher than the national average — which means it'll put more money in your account, no matter how much you contribute. You can read more about some of NerdWallet's favorite high-yield savings accounts here.

Compare some of Nerdwallet's favorite online savings options

Marcus by Goldman Sachs Marcus by Goldman Sachs Online Savings Account

Marcus by Goldman Sachs Online Savings Account

Synchrony Bank Synchrony Bank High Yield Savings Account

Synchrony Bank High Yield Savings Account

Discover Bank Discover Bank Online Savings

Discover Bank Online Savings

NerdWallet rating 
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0.60%

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APY

0.75%

With $0 minimum balance

APY

0.60%

With $0 minimum balance

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So how much should you have in savings? It is generally recommended to keep an emergency fund of about three to six months’ worth of living expenses for unexpected expenses.

Once your savings account holds that amount, consider opening an additional retirement account or increasing your contributions to existing retirement funds. Those include 401(k)s and individual retirement accounts.

Keeping the right amount of cash in your checking and savings accounts ensures that you’re able to cover your daily needs and emergencies, avoid unnecessary bank fees and grow your long-term savings. Again, it's about finding what's right for you, not having the average checking account balance.

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