Your checking account is what you regularly use to pay your bills. The median value of all checking and savings accounts was $5,300 as of 2019, the last available data reported by the Federal Reserve. But if your checking account is your sole banking tool, you may be wondering, “how much money can you have in a checking account?”
While banks don’t set account limits, there are some drawbacks to keeping too much cash in a checking account. Depending on your situation, it may make more sense to stash your money in a savings account or certificate of deposit (CD) instead.
How Much Money Can You Have In a Checking Account?
When you open a new checking account, you typically deposit a certain amount to meet the bank’s account minimums. For example, you can open a Southeast Bank checking account with as little as $50.
Although banks don’t limit how much money you can store in a checking account, there are downsides to keeping too much money in there.
Security
Is it safe to keep money in a checking account? Most banks are members of the Federal Deposit Insurance Corporation (FDIC). Customers of FDIC member banks are protected by FDIC deposit insurance if the bank fails. When you open a bank account, your deposits are insured for up to $250,000.
Lower Yields
Checking accounts usually have much lower annual percentage yields (APYs)* than savings accounts, and some earn no interest at all. There are exceptions — Southeast Bank’s Bonus Rate Checking1 allows you to earn up to 3.75% APY* on balances up to $20,000 by meeting requirements.
2. CDs
CDs can be an excellent tool for storing your money and earning a higher yield. CDs hold your money for a fixed period of time. In exchange, the bank pays you interest, often at a higher APY than you’d get with a checking or savings account. However, the money cannot be touched until the CD’s maturity date, or you’ll incur early withdrawal penalties.
3. Individual Retirement Accounts (IRAs)
If you want to save for your future, stashing your money in an IRA can be an excellent idea. Depending on the IRA type and whether you have a retirement plan through an employer, your contributions may be tax-deductible. You can also invest those contributions in the stock market to potentially grow your money.
Opening a Checking Account Account
How much money can you have in a checking account? Now that you know that banks don’t set maximum account limits, you can come up with a plan to handle your money. You can keep some cash in a checking account, but you may decide your money can do more in a savings account, CD, or IRA.
To discuss your options or to open a new account, visit a Southeast Bank branch near you!
Information contained in this blog is for educational and informational purposes only. Nothing contained in this blog should be construed as financial, legal or tax advice. An attorney, financial advisor, and/or tax advisor should be consulted for advice based on your circumstances.
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