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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.
April 24, 2019
Banking, Checking Accounts, Savings Accounts
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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.

According to a 2019 NerdWallet survey, conducted online by The Harris Poll, the average checking account balance among Americans with checking accounts was about $2,900 and the median was $1,250. 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.

And if you’re ready to shop around for a new savings account, jump ahead to a few of NerdWallet’s top picks.

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.

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 above 2%. That is significantly higher than the national average.

COMPARE THREE ONLINE SAVINGS OPTIONS

If you’re on your phone, scroll to the right for another option.

Goldman Sachs Bank USA

at Goldman Sachs Bank USA,

Member, FDIC

NerdWallet bank rating:
4.0 NerdWallet rating
NerdWallet bank rating:
4.0 NerdWallet rating
Discover

at Discover,

Member, FDIC

NerdWallet bank rating:
4.5 NerdWallet rating

APY

2.25%





Monthly fees

$0





Bonus features

Excellent CD options



APY

2.25%





Monthly fees

$0





Bonus features

Large ATM network



APY

2.10%





Monthly fees

$0





Bonus features

Solid CD options



See more high-yield savings accounts

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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