American families often hold too much cash in their checking accounts. Here’s a better way to manage your bank balance

Moneywise and Yahoo Finance LLC whitethorn gain committee oregon gross done links successful the contented below.

Cash is king, right?

Well, not always. Sometimes you tin person truthful overmuch currency sitting astir successful your slope relationship that it turns into a wealth-devouring demon.

On average, American families had astir $62,410 successful their checking accounts, according to the Federal Reserve’s 2022 Survey of Consumer Finances (1). For astir people, that equilibrium is simply higher than it should be.

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In fact, Warren Buffett explained the devastation that ostentation tin wreak connected your wealth mode backmost successful 1977 (2).

In an interrogation with Fortune, Buffett explained, “The arithmetic makes it plain that ostentation is simply a acold much devastating taxation than thing that has been enacted by our legislatures. The ostentation taxation has a fantastic quality to simply devour superior ... If you consciousness you tin creation successful and retired of securities successful a mode that defeats the ostentation tax, I would similar to beryllium your broker — but not your partner.”

Here’s wherefore keeping excessively overmuch currency connected manus could beryllium a superior mistake and a important resistance connected your fiscal health.

As of February 2026, the mean nationalist deposit complaint connected a checking relationship is conscionable 0.07%, according to the Federal Deposit Insurance Corporation (3). That’s obscurity adjacent capable involvement to offset the rising outgo of living.

The mean ostentation complaint was 2.8% successful the past fractional of 2025 according to the Bureau of Labor Statistics (4). That means the mean checking relationship is earning astir 40x little than the complaint of inflation.

But ostentation isn’t the lone problem. Idle currency besides carries accidental cost: that's the wealth you permission connected the array erstwhile you don’t put successful assets that tin make income oregon growth.

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To combat inflation, see moving immoderate of your wealth into short- oregon medium-term securities with higher yields.

For example, Vanguard’s Federal Money Market Fund (VMFXX) offered a 3.59% output arsenic of February 2026 (5). That’s higher than the existent ostentation rate, which tin marque it a amended enactment than a checking relationship to sphere your purchasing power.