Do You Have Too Much Money in Your Checking Account? 3 Red Flags to Watch in May 2025

Motley Fool

08 May

Image source: Getty Images

KEY POINTS

If your checking account has too much money, then you're costing yourself big-time.
Money that's sitting in checking has a tendency to get spent -- even if it shouldn't be.
If you have high-interest debt, then every spare dollar should go toward paying it off.

Your checking account is a great place for your spending money. Your paycheck comes in, bills go out, and you can swipe your debit card without thinking twice.

But keeping too much in checking can quietly cost you hundreds or even thousands of dollars a year.

Here are three signs you may be parking more cash in checking than you should -- and what to do instead.

1. You have more money in checking than you spend in any given month

Most checking accounts earn little or no interest. So if you're sitting on a few thousand dollars that you won't need right away, you're missing a simple opportunity to earn more money.

Our Picks for the Best High-Yield Savings Accounts of 2025

Product	APY	Min. to Earn
Barclays Tiered Savings Member FDIC. APY 4.10% Rate info Min. to earn $0 Open Account for Barclays Tiered Savings On Barclays' Secure Website. Member FDIC.	4.10% Rate info	$0	Open Account for Barclays Tiered Savings On Barclays' Secure Website.
SoFi Checking and Savings Member FDIC. APY up to 3.80%² Rate info Min. to earn $0 Open Account for SoFi Checking and Savings On SoFi's Secure Website. Member FDIC.	up to 3.80%² Rate info	$0	Open Account for SoFi Checking and Savings On SoFi's Secure Website.
Capital One 360 Performance Savings Member FDIC. APY 3.60% Rate info Min. to earn $0 Open Account for Capital One 360 Performance Savings On Capital One's Secure Website. Member FDIC.	3.60% Rate info	$0	Open Account for Capital One 360 Performance Savings On Capital One's Secure Website.

Disclaimers

SoFi disclosure:

¹ New and existing Checking and Savings members who have not previously enrolled in Direct Deposit with SoFi are eligible to earn a cash bonus of either $50 (with at least $1,000 total Eligible Direct Deposits received during the Direct Deposit Bonus Period) OR $300 (with at least $5,000 total Eligible Direct Deposits received during the Direct Deposit Bonus Period). Cash bonus will be based on the total amount of Eligible Direct Deposit. If you have satisfied the Eligible Direct Deposit requirements but have not received a cash bonus in your Checking account, please contact us at 855-456-7634 with the details of your Eligible Direct Deposit. Direct Deposit Promotion begins on 12/7/2023 and will be available through 1/31/2026. Full terms at sofi.com/banking. SoFi Checking and Savings is offered through SoFi Bank, N.A., Member FDIC. SoFi members with Eligible Direct Deposit can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Eligible Direct Deposit amount required to qualify for the 3.80% APY for savings (including Vaults). Members without Eligible Direct Deposit will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.

² SoFi members who enroll in SoFi Plus with Eligible Direct Deposit or by paying the SoFi Plus Subscription Fee every 30 days or SoFi members with $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. Members without either SoFi Plus or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. If you have satisfied Eligible Direct Deposit requirements for our highest APY but do not see 3.80% APY on your APY Details page the day after your Eligible Direct Deposit arrives, please contact us at 855-456-7634. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet. See the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

³ We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.

⁴ SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per depositor per legal category of account ownership, as described in the FDIC’s regulations.

Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $3M through participation in the program. See full terms at SoFi.com/banking/fdic/sidpterms. See list of participating banks at SoFi.com/banking/fdic/participatingbanks.

⁵ We’ve partnered with Allpoint to provide you with ATM access at any of the 55,000+ ATMs within the Allpoint network. You will not be charged a fee when using an in-network ATM, however, third-party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.

⁶ Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

⁷ Overdraft Coverage is limited to $50 on debit card purchases only and is an account benefit available to customers with Eligible Direct Deposits of $1,000 or more during the current 30-day Evaluation Period as determined by SoFi Bank, N.A. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Members with a prior history of non-repayment of negative balances are ineligible for Overdraft Coverage.

Let's say you have an extra $5,000 just sitting in checking. Move that to a high-yield savings account (HYSA) earning 4.00% APY, and you'd earn $200 a year in interest -- for doing nothing.

If you don't have a high-yield savings account, then open one yesterday. HYSAs earn at least nine times the national average APY, and they're just as safe as the big, traditional banks we know so well.

One of our favorites, the Barclays Tiered Savings account, pays 4.10% APY on all balances under $250,000. There are no minimum deposits and no monthly fees. Click here to learn more and open a Barclays Tiered Savings account today.

2. Your spending is creeping upward

When your checking account always looks flush, it's easy to spend money without a care. So take a look at your last six months' worth of bank statements and see if your spending has gone up. You may find that you're eating out more, making impulse purchases, or paying for subscriptions you've forgotten about.

I recently did this with my checking account and credit card statements. It was not fun (past me sure was dumb), but it was an extremely good use of my time. I trimmed some spending and moved more money to my savings and retirement accounts.

If your spending is sneakily getting bigger, try moving any surplus out of checking. You'll be less tempted to spend it, and you'll likely save more in the long run.

3. You have high-interest debt

Credit card debt is expensive, with rates often topping 20%. And yet many people keep thousands in checking "just in case" while paying hefty interest charges every month.

If you have more money in checking than you need for bills and a small buffer, consider using the extra to pay down debt. Even putting a few hundred dollars toward your balance can save you a lot in interest over time.

Every dollar that's not earning you money should be helping you save money -- and wiping out high-interest debt is one of the best ways to do that.

Checking accounts are essential -- to a point

Your checking account should cover your regular expenses -- not serve as long-term storage for your cash. If you're raising any of the red flags above, it might be time to move money into a high-yield savings account or start tackling your debt.

Ready to make your money work harder? Check out our list of the top high-yield savings accounts.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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