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How much money can you keep in a bank?

There is no maximum limit, but your checking account balance is only FDIC insured up to $250,000. However, as we'll cover shortly, it makes sense to put extra cash somewhere it will earn interest.

fool.com - Keeping the right amount of money in your checking account | The Ascent

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3. You'll need to meet the minimum balance requirement (and then some)

Most traditional banks require you to maintain a minimum account balance to avoid monthly service charges. These typically range from $100 to $2,500, though most are much closer to the lower end. If your bank has a particularly high minimum balance requirement, you don't want to have to worry about how much to keep in your account. Your priority should be to switch to a no-fee, no-minimum online checking account. Minimum balances aside, how much money can you have in a checking account? There is no maximum limit, but your checking account balance is only FDIC insured up to $250,000. However, as we'll cover shortly, it makes sense to put extra cash somewhere it will earn interest.

4. Liquidity matters

Most vendors take cash, debit, and/or credit cards. However, a select few are cash-only or cash- and debit-only. Having money in a checking account means you're only an ATM or debit card away from making a purchase with a payment-picky vendor. This is especially important when you keep your savings and checking at different banks, and transfers aren't instantaneous. Admittedly, one to two months' worth of spending is a somewhat arbitrary amount to keep in a checking account. But it's high enough for most people to go a long time without having to move money between accounts and avoid an overdraft. If you get paid by direct deposit into a checking account biweekly, keeping a checking account balance of one month's spending will all but guarantee you never overdraft your account.

Why you shouldn't keep all your money in a checking account

In a perfect world, we'd all keep our money in savings accounts and skip the checking account altogether. But because regulations limit savings accounts to six transactions a month, they aren't practical for people who need to pay bills or make debit card purchases. This is exactly why checking accounts exist: They're transactional accounts where you keep money you may need in the near future. But they aren't a good place to store all your cash for two big reasons:

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Low interest rates: Even the very best checking account pays less in interest than an online savings account or money market account. You want to keep most of your cash where it earns the most interest. A checking account is not that place. Theft risk: Though this is a small risk, the reality is that money you keep in your checking account can be easily accessed via a debit card. If your card is lost or stolen, your account could be wiped out by unauthorized purchases or ATM withdrawals. Debit cards have poor consumer protections against fraud. If it takes you too long to realize your account has been compromised, you could be fully responsible for any fraudulent charges. Meanwhile, many credit card issuers offer zero liability for fraudulent transactions. This means you're totally off the hook if someone makes credit card purchases in your name. This is why we advise using credit cards or cash. You may see this as paranoid, but you only need to have your debit card number stolen once to realize how troublesome it can be. Don't take these reasons to the extreme. I'm not advising you keep your checking account balance at the bare minimum; just keep things in perspective. Like many aspects of your financial life, it's about avoiding extremes. Don't stress whether you want to keep a checking account balance of one month's expenses vs. three month's expenses. But don't keep all your money in a checking account when it could be earning interest elsewhere.

Still have questions?

Here are some other questions we've answered:

fool.com - Keeping the right amount of money in your checking account | The Ascent

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