Your checking account plays an essential role in your financial life. It allows you to receive your payroll direct deposits, pay bills, write checks, make debit card purchases, withdraw cash at ATMs, even send money digitally to friends and family.
But since these accounts generally pay little to no interest, it can be tricky to figure out exactly how much to keep in your checking account. If you keep the balance too low, you risk overdrafts, bounced checks, and account fees. But if you keep the balance too high, you give up the opportunity to earn a better interest rate elsewhere.
So how much money should you keep in your checking account? Below, we’ll explore the average checking account balance — and the factors that can affect the average amount of money in a checking account.
What Is Considered a “Normal” Balance?
There’s no one ideal amount to keep in checking, since everyone’s financial situation is different. A common rule of thumb, however, is to keep around one to two months’ worth of living expenses in either a traditional or online checking account.
So, for example, if your monthly expenses are $4,000, you’d want to keep around $8,000 in checking. This helps to ensure you’re able to cover your short-term expenses and don’t accidentally overdraft your account or dip below the minimum balance required to avoid a monthly fee.
While a “normal” checking account balance will vary by income and expenses, we can get a sense of the average checking account balance in the U.S. by looking at the Federal Reserve’s most recent Survey of Consumer Finances (which is based on 2022 data). According the the Fed, Americans hold a median balance of $8,000 in transaction accounts (which include both checking and savings accounts).
Recommended: Reasons to Balance Your Checking Account Every Month
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Average vs Median
Government data on the average amount of money in checking accounts includes two different figures: the median and the mean (or average). For example, Americans hold a median balance of $8,000 in transaction accounts, but a mean balance of $62,410.
Why such a large disparity? The mean, or average, number is skewed by people holding high balances. As a result, it doesn’t paint a realistic picture of how much money the average American is really keeping in the bank.
Think back to math class where you learned about the difference between mean and median. The average balance in a checking account is determined by adding together every single checking account balance and dividing by the number of checking accounts. Extremely high and low balances can really skew that number.
The median balance, on the other hand, is the middle value when a data set is ordered from least to greatest. For instance, if you were analyzing five checking accounts, ordered by lowest to highest to balance, you’d look at the balance of the third checking account to get the median:
• $300
• $500
• $2,000
• $10,000
• $20,000
Here, the median checking account balance is $2,000. However, the average balance of the checking accounts is $6,560.
Recommended: Current vs. Available Balance in a Checking Account
Factors Impacting Balances
There are a number of things that can impact the average amount in a checking account, from income to age to geographical location. Here’s a look at three key factors that can lead to keeping different amounts in a checking account.
Income Levels
As you might expect, income level can have a significant impact on checking account balances. People who make more money tend to spend more on things like rent, food, shopping, and entertainment. And when your living expenses are higher, you generally need to keep more money in your checking account.
Based on the Fed’s data, for example, Americans who earn less than $20,000 a year have a median transaction account balance of $900. For those who earn between $90,000 and $100,000, however, the median balance rises to a whopping $111,600.
Savings Rates
Interest rates on savings rates can also impact how much people keep in their checking account. When annual percentage yields (APYs) for savings accounts are especially high, it’s natural to want to take advantage of that and keep more in savings and less in checking.
These days, keeping only as much as necessary in checking and moving your extra cash in savings can really pay off. While the average checking account interest rate is 0.08%, you can now find high-yield savings accounts offering APYs as high as 4.00% to 5.00% or more.
High vs Low Cost of Living Areas
If you live in an area of the country where the cost of living is relatively steep, you’ll need more money available in checking to cover everyday expenses like rent, utilities, groceries and gas. If you live somewhere with a relatively low cost of living, on the other hand, you can likely keep a lower-than-average checking account balance without running the risk of dipping into negative territory and, in turn, triggering fees or bouncing checks.
Balances by Age Group
Age also has a significant impact on the average checking account balance. As we get older, we tend to build wealth and, in turn, keep more money in transaction accounts like checking accounts. Here’s a closer look at how checking account balances vary by age.
Average for Millennials/Gen Z
According to the Fed’s data, Millennials and Gen Z’s keep somewhere between $5,400 and $7,500 in their transaction accounts.
| Age | Median Value of Account Holdings |
|---|---|
| Under age 35 | $5,400 |
| Age 35 to 44 | $7,500 |
Average for Gen X
The Fed’s survey shows that adults aged 45 to 54 (who are considered “Gen Xers”) have a median balance of $8,700 in their transaction accounts.
Recommended: What Is the Average Savings by Age?
Average for Baby Boomers/Retirees
Baby Boomers and retirees have the highest average amount of money in their checking and other transactional accounts. Depending on their age, Boomers and retirees typically have median balances somewhere between $8,000 and $13,400. Interestingly, account balances tend to start decreasing in adults 75-plus.
| Age | Median Value of Account Holdings |
|---|---|
| 55-64 | $8,000 |
| 65 to 74 | $13,400 |
| 75+ | $10,000 |
Balances by Household Income
Government data shows large disparities in account balances between low-, mid-, and high-earners in the U.S. Here’s a detailed look at how household income affects how much Americans keep in their transaction accounts.
| Income Range | Median Value of Holdings |
|---|---|
| Less than $20,000 | $900 |
| $20,000 to $39,900 | $2,550 |
| $40,000 to $59,900 | $7,400 |
| $60,000 to $79,900 | $15,760 |
| $80,000 to $89,900 | $33,800 |
| $90,000 to $100,000 | $111,600 |
Typical Emergency Fund Recommendations
Personal finance experts generally recommend keeping at least three to six month’s worth of living expenses in the bank to help cover the unexpected, such as an expensive car or home repair, medical emergency, or loss of income. So, for example, if your monthly living expenses are $4,000, you would want to keep $12,000 to $24,000 in your emergency fund. If you’re self-employed or work seasonally, however, you may want to aim for closer to six to 12 months’ worth of expenses.
That said, your emergency savings is generally not part of your checking account balance. Instead, you’ll want to keep that money in a savings account at a traditional or online bank or credit union. For one reason, you’ll be less tempted to spend your emergency fund on nonessential purchases if it’s a little further out of reach. For another, the interest rate for a savings account is typically higher, which will help your emergency grow over time.
The Takeaway
The average or normal checking account balance varies by age, income, lifestyle, and other factors. Ideally, you want to have enough in checking to cover one to two months’ worth of living expenses. This can help you avoid accidentally overdrafting the account or dipping below any required minimums. You can then move any additional cash to a vehicle that offers a higher return, enabling your money to grow faster.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
FAQ
How much does the average person have in their checking account?
The average checking account balance can vary significantly depending on age, income level, spending habits, and other factors. According to the Federal Reserve’s most recent Survey of Consumer Finances, Americans have a median balance of $8,000 in transaction accounts (which include checking and savings accounts).
Can you have too much money in your checking account?
Yes. Keeping too much money in a checking account can be inefficient because these accounts typically offer low or no interest. A good rule of thumb is to keep enough money to cover one to two months’ worth of expenses in checking, and move excess cash to an account where you can earn higher returns, such as a high-yield savings account, investment account, or individual retirement account (IRA).
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SoFi members with direct deposit activity can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.50% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.50% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
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