Is This The Biggest Secret in Banking? Here's Why You Probably Have Too Much Money in Your Checking Account
KEY POINTS
- Keeping too much money in your checking account means you're likely missing out on hundreds of dollars in interest every year.
- A high-yield savings account (HYSA) can earn you 50 to 60 times more interest than a regular checking account.
- By moving extra cash into an HYSA, investing, or paying down debt, you can make your money work harder for you.
If you're like most people, you probably don't think twice about how much money is sitting in your checking account. It's safe, easy to access, and gives you peace of mind, right? But here's something your bank won't tell you: Keeping too much money in your checking account is costing you.
I used to make the same mistake. I liked seeing a big cushion in my checking account -- it made me feel financially secure. But then I realized I was missing out on hundreds of dollars in extra interest each year.
If you're sitting on more cash than you actually need for bills and everyday spending, it's time to make a change.
How much is too much in checking?
Here's a simple rule that helped me: Keep one to two months' worth of expenses in your checking account. Anything beyond that you need to move somewhere it can actually grow.
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 5, 2025. Terms apply.
Min. to earn
$0
Open Account for American Express® High Yield Savings
On American Express's Secure Website. |
3.70%
Rate info
3.70% annual percentage yield as of April 5, 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. |
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. |
Capital One 360 Performance Savings
Member FDIC.
APY
3.70%
Rate info
See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Feb. 6, 2025. Rates are subject to change at any time before or after account opening.
Min. to earn
$0
Open Account for Capital One 360 Performance Savings
On Capital One's Secure Website. |
3.70%
Rate info
See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Feb. 6, 2025. Rates are subject to change at any time before or after account opening.
|
$0
|
Open Account for Capital One 360 Performance Savings
On Capital One's Secure Website. |
Here's why:
- Your money isn't earning much. The average checking account offers 0.07% APY or less.
- Inflation is eating away at your cash. With rising prices, the money in your checking account loses value over time.
High-yield savings accounts (HYSAs) pay far more. Many offer 4.00% APY or higher, meaning your money could be earning 50 to 60 times more in an HYSA than a checking account.
Start earning potentially hundreds of dollars a year just by moving your cash to a LendingClub LevelUp Savings account -- apply here to open an account now.
So, where should you put your extra cash?
I get it -- moving money around can feel like a hassle. But trust me, it's worth it. Here's where I put my extra funds:
1. High-yield savings account (HYSA)
This was a game-changer for me. With an HYSA, my savings started earning 50 to 60 times more than what my checking account paid. And the best part is that I could still access my money anytime I needed.
2. Investments for long-term growth
Once I had my emergency fund in place, I started putting extra cash into stocks and ETFs. Historically, the S&P 500 has returned an average of about 10% annually. With some patience, the stock market is still the best place to save for things like retirement.
3. Paying down debt
If you have credit card debt, extra cash in checking is wasted. I used some of my excess to knock out high-interest debt, and it saved me way more than I'd ever earn in a savings account.
Take action: Move your money and earn more
I wish I had made the switch sooner. If you have extra money just sitting in checking, it's time to move it to a high-yield savings account where it can actually grow. Many online banks make the process easy with high APYs, no fees, and quick transfers.
Compare the best high-yield savings accounts today and find one that fits your needs. Trust me, once you start seeing those higher interest earnings roll in, you'll wonder why you didn't do this sooner.
Our Research Expert
Jake is a full-time Editorial Strategist for Motley Fool Money. He specializes in product ratings and all things credit cards, and wants to make sure each person has the best card for them.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Motley Fool Money does not cover all offers on the market. Motley Fool Money is 100% owned and operated by The Motley Fool. Our knowledgeable team of personal finance editors and analysts are employed by The Motley Fool and held to the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands. Terms may apply to offers listed on this page. APYs are subject to change at any time without notice.