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Warning: Having a Lot of Money in Your Bank Account Isn’t Really That Good For You



Most of the time it seems as if the only thing we can afford to pay is our bills. We may find it troublesome even though we know that we have to pay them as we fork over out hard earned money bitterly. Other times, we feel happier because we realize we saved up enough to go on that Disney trip or spend that weekend treating ourselves. When things are working out great, there is a skip in our step, and when things are not working out, there is a chip on our shoulder.

The average household often experiences a balance of the two on a yearly basis. Nonetheless, with the recent positive changes that has been going on in our economy, the same people who are so used to struggling to make ends, are the same people who are doing much better today. Most people who have extra money will keep their funds safely in their bank ready for to use when they need it.

More Americans are depositing money into their checking accounts more than ever, and it actually not that great. According to the economic research firm Moebs Services, the typical checking balance account had $5,459 during the first quarter of 2015. That number is over twice the amount is used to before 2008. The influx may be due to a few reasons. A part of it is because more people are working or earning more money than they did before.

There are others, though, that still feel uneasy at the volatility of the economy. In their eyes, it is a smart idea to store that money to be able to use it for any adverse event. Another reason may be because consumers would rather add more funds to their bank balances as a method of avoiding low-balance charges that several banks are now charging.

Regardless of the reasons, keeping an excess amount of funds in your checking account also means that you are missing out on higher returns somewhere else.

What You Can Do

First, track your spending.   It’s better to keep a daily spending log for the next three months rather than estimating or guessing. During the next 90 days, you want to monitor every purchase you make, including bills and other payments that are withdrawn from your account automatically. Sometimes are funds that get spent at times without much thought, and it just seems to vanish. If added that if you were to record every dollar, you should be able to see precisely where it’s spent.

The minute you understand the minimum amount of money you need to have in your account, then you can take the excess and use it somewhere else. May experts recommend 4-8 weeks worth of living expenses, then add another 30% to that amount.

Why should you add that extra amount? A good chunk of revenue that banks earn is from charging their customers overdraft fees. In the event an unplanned charge for a one-off purchase occurs, the extra cash will help prevent your bank balance into the negative pit.

What You Should Do With The Additional Funds

You should take the excess funds out of your savings account because keeping in the banks means you never accrue any interest. No matter how old you are, you may want to start thinking about opening another retirement account or add more funds to an existing one you already have.

Alternatively, you can open a high-yield savings account. Several online-only banks offer consumers interest-bearing checking accounts that may also serve as a wonderful option to keep that cash. You can also even look into a CD. There are plenty of alternatives open to you other than just allowing it to sit in your checking account and not do a thing for you.


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