Here's Why Your Checking Account Should Contain as Little Money as Possible
Image source: Getty Images
I used to treat my checking account like a piggy bank. I'd let my balance build up and get super big because I didn't know where else to save money.
But then I realized I was ripping myself off, because that money could have been earning 400x more interest in a high-yield savings account (HYSA).
Checking accounts are like the couch in your living room -- great for short-term comfort, but you don't want your money camped out there forever. Here are four reasons why.
1. Checking accounts pay you basically nothing
The average checking account pays something like 0.07% APY. That's $7 a year on a $10,000 balance. Meanwhile, inflation is chewing away at your dollars like a termite in a woodpile.
Compare that to a high-yield savings account, where top online banks are offering 4.00% APY or better right now. That same $10,000 earns $400 a year.
I remember the first time I moved my "rainy day" money to an HYSA. I literally earned more in one month than my checking account gave me in an entire year.
2. Big balances make overspending way too easy
Back when I used to keep a fat cushion in my checking account, I'd find myself thinking, "Eh, I can afford that extra surfboard" (or whatever impulse buy I was thinking of at the time). The balance made me feel rich, even though most of that money was earmarked for savings.
Now I keep a very low balance in my checking account -- about one month's worth of expenses, plus a small buffer. The rest gets whisked away to savings or investments.
Out of sight, out of mind. And way fewer dumb purchases.
One bank I've been impressed with lately is LendingClub, which offers an impressive 4.20% APY with $250+ in monthly deposits. Find out more below and click to open an account today.
2025 Award Winner
LendingClub LevelUp Savings
On LendingClub's Secure Website.
= Best
= Excellent
= Good
= Fair
= Poor
= Best
= Excellent
= Good
= Fair
= PoorOn LendingClub's Secure Website.
- Competitive APY
- No fees
- Easy ATM access
- Unlimited number of external transfers (up to daily transaction limits)
- Requires you to make monthly deposits to earn the best APY
- ACH outbound transfers limited to $10,000 per day for some accounts
- No branch access; online only
The LendingClub LevelUp Savings account has a lot to offer. At the top of the list is its high APY, though you must deposit monthly to earn the best rate. Next is zero account fees, a strong and straightforward perk. Finally, you get a free ATM card, which you can use to withdraw from thousands of ATMs nationwide. Interested? You can open an account with $0.
3. You're skipping the stock market's long game
Too many Americans treat their checking account as the "default" place to save. When in reality that money would be way better off funneled into long-term investments.
The S&P 500 has averaged about 10% annual returns over the long haul. If your "extra" cash is just sitting in a checking account for years on end, it's missing the party.
About nine years ago, I started throwing ~$500 a month into a Roth IRA account -- that balance is now $111,732. Even small amounts redirected into an index fund can snowball into something life-changing over time. You can't grow wealth in a checking account.
4. More money, more fraud risk
If a scammer ever gets into your checking account, a giant balance just puts a bigger target on your back. Yes, banks offer fraud protection, but getting your money back can take weeks. That's stress you don't need when bills are due.
Keeping a lean checking balance means less exposure. The rest of your money is safer in accounts with stronger protections (and higher earnings).
Checking is a tool, not a storage unit
Checking accounts are built for spending, not for stashing savings or growing wealth.
The sweet spot is keeping just enough for bills, groceries, and short-term stuff.
Everything else should be shoved into a higher paying HYSA, CDs, or long-term investments -- places where your money actually multiplies. That's what I've done for years now, and honestly, I wish I'd started sooner.
If you're looking for a spot to stash your extra cash, check out our list of the best high-yield savings accounts. These banks pay way more than the big guys, and that little move could earn you hundreds (or thousands) in extra interest each year.
Our Research Expert
Joel is a full-time Personal Finance Writer at Motley Fool Money, known for his clear, approachable voice on topics like credit cards, savings hacks, and side hustles. He’s been writing about money since 2018 and previously managed editorial content for the How To Money podcast.