7 Reasons You Shouldn’t Keep More Than $3,000 in a Checking Account

Many people simply leave a large portion of their money in their checking account and leave it there. But is this the best move? Probably not.

GOBankingRates spoke with Rachael P., an experienced banker who has seen it all when it comes to customers’ banking habits.

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She knew firsthand the dangers of having too much money in a checking account and was always ready to give tough financial advice when needed.

Here are the seven reasons a bank teller advises against keeping more than $3,000 in a checking account.

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No interest is earned on larger balances

The main reason Rachael didn’t like seeing large balances in checking accounts was the complete lack of interest. “Why would you just leave $10,000 lying around and do nothing?” she asked.

Checking accounts are intended for money to be spent in the short term, not for larger amounts that could earn interest elsewhere.

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Easier access increases the likelihood of frivolous spending

Rachael had noticed a clear connection between the size of a customer’s checking account balance and the level of their frivolous spending.

“It’s like having a milkshake in front of you 24/7 – you’re constantly taking a sip whether you need it or not,” she said.

Separating larger amounts makes it psychologically more difficult to access funds intended for other purposes.

You lose opening bonuses

Many banks offer lucrative bonuses of $200 or more just for opening new checking or savings accounts and maintaining a minimum balance.

However, if you already have a large checking account balance, you’re missing out on the opportunity to take advantage of these offers.

“Why leave money on the table?” Rachael asked. “This bonus could flow directly into investments.”

Your money is not as safe as you think

For all the security surrounding banks, a checking account balance only carries $250,000 in FDIC insurance in the event the bank fails. Amounts beyond this are not protected.

By holding an excessive amount of money in a checking account, customers were putting their money at unnecessary risk.

“Write that number down and decide if it’s worth it,” Rachael said.

No option for compounding

“The miracle of compounding only works when your money is actually invested and generating returns,” shared Rachael.

By leaving large amounts of money in checking accounts, many people deprived themselves of decades of growth potential.

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Even a simple, high-yield savings account could earn a customer hundreds – if not thousands – more per year than a regular checking account.

This can impact mortgages, car loans and other approvals

“During the underwriting process, banks and lenders pay oblique attention to excess funds in checking accounts,” Rachael explained.

You want a clear distinction between assets, investments and funds earmarked for down payments or reserves.

“If they see $50,000 in your checking account, they will wonder if that money should have been put somewhere else in your finances.”

You could be the target of fraud

“As sad as it is, sometimes having a high checking account balance opens you up to fraudsters inside and outside the bank,” Rachael said.

She had seen professional fraudsters become very good at examining account balances and devising methods to siphon large amounts of money illegally.

While no amount will make you 100% safe, smaller balances tend to slip under the radar more easily.

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