![](https://nordot-res.cloudinary.com/c_limit,w_800,f_auto,q_auto:eco/ch/images/1182976656667836995/origin_1.jpg)
While many of us might feel secure holding substantial funds in our primary bank accounts, a bank insider warns that having over $3,000 in your chequing account might not be as safe as you think. This advice sheds light on potential risks and offers a fresh perspective on how to better manage your money to ensure both security and financial growth.
In a report, GOBankingRates consulted Rachael P., a veteran bank teller with a wealth of experience in customer banking practices and she shed light on how to be smart about having a banking account.
Having witnessed firsthand the drawbacks of keeping excessive funds in checking accounts, Rachael readily offered insightful financial advice. Here are the seven reasons why the veteran banker recommends keeping no more than $3,000 in a chequing account:
1) Lost Opportunity For Growth
One of the main drawbacks of keeping a large sum in your checking account is the lack of interest earned. As Rachael pointed out, "Why would you keep $10,000 just sitting there doing nothing?"
Checking accounts are designed for everyday transactions, not for storing significant funds that could be accumulating interest in a savings account or other investment vehicle.
2) Easier Access Can Fuel Impulsive Spending
According to Rachael P., a veteran bank teller, there seems to be a connection between the size of a checking account balance and the likelihood of unnecessary spending. By separating larger amounts into different accounts, you create a psychological barrier that discourages impulsive spending, keeping those funds earmarked for their intended purposes.
3) Missed Bonus Opportunities
Keeping a large sum in your checking account could also mean missing out on advantageous bank offers. Many banks offer attractive incentives, often exceeding $200, for opening new checking or savings accounts and maintaining a specific minimum balance.
With a large sum already sitting in your checking account, you might miss out on these opportunities to earn extra money. As Rachael aptly phrased it, "Why leave money on the table? That bonus could go right into investments."
4) Limited FDIC Insurance Coverage
While banks prioritise security, it's important to remember that FDIC insurance protects only up to $250,000 per depositor in the event of a bank failure. Exceeding this limit in a checking account exposes additional funds to risk.
As Rachael advised, make sure you understand your FDIC coverage and decide if keeping a significant amount of money in a checking account makes sense.
5) Missing Out On Compounding Growth
As Rachael explained, "the miracle of compounding only works if your money is actually invested and earning returns." Many people unintentionally forgo this potential for long-term growth by keeping substantial sums in checking accounts.
Even a basic high-yield savings account can earn customers hundreds, or even thousands, of dollars more per year compared to a standard checking account.
6) Potential Impact On Loan Applications
According to Rachael, a surprisingly large checking account balance could raise questions during the loan approval process. Lenders typically prefer a clear distinction between your everyday funds, invested assets, and earmarked savings for purposes like down payments or emergency reserves.
As the experienced bank teller explained, "If they see $50,000 in your checking account, they're going to wonder if that money should have been dedicated elsewhere in your finances."
7) Increased Risk Of Fraudulent Activity
Unfortunately, as Rachael pointed out, having a substantial checking account balance can make you a more attractive target for scammers, both inside and outside of the financial institution. She's witnessed firsthand how professional fraudsters can exploit account information to steal significant sums.
For instance, an Australian student recently fell victim to a surprisingly simple scam, tragically losing $12,000 saved for a life-changing exchange trip to America. A recent report reveals that scammers impersonating well-known brands have swindled users out of a staggering $60 million. These scams trick people into surrendering personal information or money.
While complete security is impossible, maintaining smaller balances in checking accounts can make them less conspicuous to potential scammers. By following these tips and staying vigilant, you can safeguard your hard-earned money and make informed decisions about where to keep your funds.