7 reasons why you shouldn’t keep more than $3,000 in a checking account

Many people simply leave a large amount of money in their checking accounts and let it stay there. But is this the best move? Probably not. GOBankingRates spoke with Rachael P., an experienced bank teller who has seen it all when it comes to customers’ banking habits. She knew firsthand the pitfalls of keeping too much money in a checking account and was always ready to offer tough financial advice when needed.

Here are the seven reasons a bank teller advised against it. keep more than $3,000 in a checking account.

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No interest earned on larger balances

The main reason Rachael didn’t like seeing huge balances in checking accounts was the complete lack of interest earned. “Why would you keep $10,000 just sitting there doing nothing?” she asked. Current accounts are for money that will be spent in the short term, not larger amounts that could earn interest elsewhere.

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Easier Access Makes Frivolous Spending More Likely

Rachael noticed a clear correlation between the size of a client’s checking account balance and the amount of frivolous spending they make. “It’s like having a milkshake in front of you 24/7 — you’ll keep sipping whether you need to or not,” she said. Setting aside larger sums makes it psychologically more difficult to draw on funds earmarked for other purposes.

You lose opening bonus

Many banks offer lucrative bonuses of $200 or more just for opening new checking or savings accounts and maintaining a minimum balance. But if you already have a large checking account balance, you will miss the opportunity to profit from these trades. “Why leave money on the table?” Rachel asked. “This bonus could go straight to investments.”

Your money is not as safe as you think

Despite all the security surrounding banks, a checking account balance has only $250,000 of FDIC insurance if the bank fails. Any value above this is not protected. By keeping an excessively large amount in a current account, customers were putting their money at risk unnecessarily. “Write down that number and decide if it’s worth it,” Rachael said.

No opportunity for compounding

“The miracle of capitalization only works if your money is actually invested and generating a return,” shared Rachael. By leaving large amounts of money in checking accounts, many people were depriving themselves of decades of potential growth. Even a simple high-yield savings account could earn a customer hundreds – if not thousands – more per year than a standard checking account.

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May affect mortgages, car loans and other approvals

During the underwriting process, banks and lenders look askance at excess funds deposited in checking accounts, Rachael explained. They want to see a clear delineation between assets, investments and funds earmarked for down payments or reserves. “If they see $50,000 in their checking account, they will wonder if that money should have been dedicated to another part of their finances.”

You could become a target of fraud

“As sad as it is, sometimes having a large checking account balance makes you a target for scammers inside and outside the bank,” said Rachael. She has seen professional scammers become quite skilled at studying account balances and devising ways to illicitly embezzle large sums. While no sum makes you 100% safe, smaller balances tend to go unnoticed more easily.

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This article originally appeared on GOBankingRates. with: I’m a Bank Teller: 7 Reasons Why You Shouldn’t Keep More Than $3,000 in a Checking Account