Expert reveals how much money you should keep in your bank account and why having too much isn't smart
Times are tough for everyone, and it's getting harder to save for a rainy day. Four figures in your checking account may sound like a dream, but here's why experts warn against it.
Experts in the United Kingdom say that any more than £1000 ($1340) in your checking account may as well be a cash loss.
"A current [checking] account should be seen as a tool for everyday spending, not a place to store large sums of money long-term," Derek Sprawling, head of money at Spring told Metro.
He told the outlet that people should see their checking account as a 'digital wallet' and says it should be designed for 'convenience not storage.'
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"You wouldn’t carry £2,500 in cash to the supermarket, so why leave it idle in a current account?" he continued.
How much should you have in your checking account?
Sprawling tells the outlet that people should have between £500 and £1,000 ($670-$1340) in their checking accounts to cover bills and other expenses.
He advises against anything higher than this due to 'interest rates on many current [checking] accounts sitting well below inflation.'
The same can be applied in the United States. According to data from the U.S. Bureau of Labor Statistics The U.S. annual inflation rate is 3.7% for the 12-month period ending September 2026, up from 3.4% in August.
According to FDIC data, the average interest rate on US checking accounts is approximately 0.07% per year.
Sprawling explained to the outlet that your money is 'effectively shrinking' if it is not earning the rate of inflation.
In simple terms, the expert is claiming that cash sitting in checking accounts is losing purchase power if prices are rising faster than the bank are paying interest.
How much money do Americans have saved?
As expected, this varies greatly according to age.
It's been reported that the average American has more than $60,000 in savings, and as expected, people aged 65 to 74 are the most well off.
But for those worrying that their amount is substantially lower, don't panic. According to the Federal Reserve's Survey of Consumer Finances, the median amount was much lower, coming in $5,400 to $8,700.
But what is the difference? Well, in simple terms, the average is everyone's amounts added together and divided by the number of bank accounts studied, while median is the middle number when amounts are ranked from lowest to highest.
Those aged under 35 had $20,540 in savings on average, while people aged 35-44 had more than double that at $41,540.
It was those aged between 65-74 who had the most cash stashed away, with an average of $100,250.
Kiesha Dosanjh
