What is the average current account balance?
Chances are, you’re pretty intimate with your checking account. This type of account is generally used for regular expenses. You can even transfer money to it several times a day. The best checking accounts are affordable to maintain, earn interest, and provide easy access to your money when you need it.
The Federal Reserve’s Survey of Consumer Finances offers a wealth of information on the use of checking accounts in the United States. It revealed that more than 92% of the population has a checking account. When the 8% without a checking account were asked why they didn’t have one, the most popular response was not wanting to deal with banks.
This was closely followed by not writing enough checks to make a checking account worthwhile. Other reasons included high service charges, lack of money, or credit issues.
Of course, most of us need checking accounts – at the very least to get direct deposit payments from an employer. But how much should we keep in our checking account? This should be enough to cover regular expenses, but not so much that you miss out on interest income elsewhere. Compare yourself to the medians below to see where you stand.
Median and average balance of checking accounts in the United States
Among Americans with checking accounts, the median checking account balance is $2,900. On the other hand, the average or average balance is $9,132. Households with much higher incomes seriously skew the numbers when you calculate the average.
Current account balances are lower than the median and average savings account balances in the United States. However, they are not so low that they indicate difficulty in paying typical living expenses. To get a better idea of where you stand, you can compare the median checking account balance filtered by demographics.
Average current account balance by age
As Americans age, they tend to have more in their checking accounts – until they reach a certain threshold. Those under 35 have an average of $4,058 and a median of $1,200. Average and median current account balances increase steadily until age 75 and then decrease.
This is likely because lifestyles peak at the end of your career, while rent and expenses tend to stay lower in early adulthood and retirement. It would seem that monthly expenses rarely exceed $16,000, which is the average balance of 65-74 year olds. For a clearer picture, check out the full breakdown of median checking account balance by age:
Under 35: $1,200
Average current account balance by income
Not surprisingly, Americans who make more money keep more of it in their checking accounts. Higher wages are likely to encourage higher living costs: higher rent, food, clothing, and entertainment bills. The difference becomes clearer with each income bracket.
In fact, median checking account balances almost double with each new bracket until we reach the highest bracket: an annual income of $160,000 or more. Those earning less than $25,000 a year tend to keep around $500 in checks, while those earning more than $160,000 have a median balance of $25,000 and an average balance of $721,613.
The numbers seem unusually high for checking accounts, but could reflect net pay deposited directly into checks. Those below the $25,000 income threshold are also the least likely to have a checking account. They probably use alternative methods like prepaid cards and money orders. You should always do your best to live within your means, while taking advantage of the best financial instruments available to you. See the full breakdown of median checking account balance by income:
Less than $25,000: $500
$25,000 to $44,999: $1,000
$45,000 to $69,999: $1,700
$70,000 to $114,999: $3,000
$115,000 to $159,999: $5,900
Average current account balance by gender
On average, households headed by men have a current account balance almost three times higher than those headed by women: $11,182 versus $3,658. The difference is even greater when comparing median current account balances. The median current account balance for men is nearly four times that of women. This could be a reflection of income disparity, as well as typical family dynamics in female-headed households (i.e. higher incidence of single parents). Here is the breakdown of the median current account balance by gender:
Average current account balance by race
Race also appears to affect how much Americans have in their checking account. Average and median checking account balances were four times higher for non-Hispanic white households than for black and Hispanic households. However, it’s important to note that nearly three-quarters of the Federal Reserve’s respondents for the Survey of Consumer Finances were non-Hispanic whites. White respondents were also significantly more likely to have a checking account. Here is the breakdown of the median checking account balance by race:
Historical Chequing Account Trends
Median current account balances appear to be on the rise over the past decade of surveys. Balances have been slightly affected since the recession, but this could indicate greater use of checking accounts and financial services in general. The Federal Reserve and the Federal Deposit Insurance Corporation have found that more and more countries are becoming banked over time. While it’s not best to keep more than you need on your check, almost every American should probably use this financial service.
Checking account advice
Even though checking accounts are pretty straightforward, there are a few best practices to keep in mind:
Although your account is often used for multiple purposes, you still want to review it as strictly as you check your credit card statement.
Run the numbers once a month to make sure there are more inflows than outflows. You don’t want to find yourself in a position where you write NSF checks, which could result in fees and a hit to your credit score. Most banks allow you to set up alerts in case your account drops below a certain amount.
Keeping a close eye on your checking account usage will also help you spot suspicious activity and prevent identity theft. You should also be aware of your use of ATMs. Some out-of-network ATMs charge fees for withdrawals. Mobile and online banking can help you manage your finances and find in-network ATMs at no extra cost.
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What is the average current account balance? appeared first on SmartAsset Blog.