Here's Why Your Checking Account Should Have as Little Money as Possible

If you're used to keeping a big balance in your checking account, you might think you're playing it safe. But keeping too much money in a checking account is actually costing you. Unlike savings accounts or investments, your checking account earns little to no interest, meaning your extra cash is just sitting there losing value.

Here's why you should keep as little money as possible in your checking account -- and where to move the rest to make your money work for you.

1. Checking accounts earn almost no interest

According to the FDIC, the average checking account APY is just 0.07%. That means even if you have $10,000 sitting in your account, you're earning just $7 per year in interest. Meanwhile, inflation is eating away at your purchasing power, making your money worth less over time.

Instead, move extra cash to a high-yield savings account (HYSA), where you can earn 4.00% APY or more. That same $10,000 would earn $400 a year instead of just $7.

Our Picks for the Best High-Yield Savings Accounts of 2025

Product	APY	Min. to Earn
American Express® High Yield Savings Member FDIC. APY 3.70% Rate info 3.70% annual percentage yield as of April 15, 2025. Terms apply. Min. to earn $0 Open Account for American Express® High Yield Savings On American Express's Secure Website. Member FDIC.	3.70% Rate info 3.70% annual percentage yield as of April 15, 2025. Terms apply.	$0	Open Account for American Express® High Yield Savings On American Express's Secure Website.
CIT Platinum Savings Member FDIC. APY 4.10% APY for balances of $5,000 or more Rate info 4.10% APY for balances of $5,000 or more; otherwise, 0.25% APY Min. to earn $100 to open account, $5,000+ for max APY Open Account for CIT Platinum Savings On CIT's Secure Website. Member FDIC.	4.10% APY for balances of $5,000 or more Rate info 4.10% APY for balances of $5,000 or more; otherwise, 0.25% APY	$100 to open account, $5,000+ for max APY	Open Account for CIT Platinum Savings On CIT's Secure Website.
Barclays Tiered Savings Member FDIC. APY 4.15% Rate info Balances less than $250,000 earn 4.15%, and balances greater than $250,000 earn 4.40% APY. Min. to earn $0 Open Account for Barclays Tiered Savings On Barclays' Secure Website. Member FDIC.	4.15% Rate info Balances less than $250,000 earn 4.15%, and balances greater than $250,000 earn 4.40% APY.	$0	Open Account for Barclays Tiered Savings On Barclays' Secure Website.

Some of these accounts earn more than 50x that of a typical checking account. Explore our list of the best high-yield savings accounts now.

2. You're more likely to overspend

Having a large balance in your checking account can make you feel like you have more money to spend -- even if that cash is meant for saving. When money is easily accessible, it's tempting to splurge on unnecessary expenses rather than let it grow.

Keep only what you need for monthly expenses in your checking account and transfer the rest to a separate savings or investment account. Out of sight, out of mind.

3. You're missing out on the stock market

Historically, the stock market has returned an average of 10% annually, as measured by the S&P 500. There will be short-term losses, but long-term the S&P 500 Index has gone up 38 of the past 50 years.

Instead of keeping money you don't immediately need in your checking account, open an IRA and start investing for retirement. Buying an S&P 500 index fund automatically diversifies your money among 500 of the biggest and most successful companies in the U.S.

4. It doesn't protect you from fraud

If someone gains access to your checking account through fraud or theft, a large balance could be at risk. While banks typically offer fraud protection, recovering stolen money can take time, leaving you stressed and potentially short on funds.

By keeping only what you need in checking, you limit your exposure to fraud and protect your money in accounts that are harder to access.

You have better options

Your checking account should be a spending tool, not a savings account. By keeping just enough for bills and short-term expenses -- and moving the rest into higher-yield accounts -- you'll grow your money faster and avoid the temptation to overspend.