Over a quarter of Americans have less than $500 in their checking account

Checking accounts keep cash easily accessible and are designed to cover short-term expenses, like rent and groceries. It's a common rule of thumb to keep one to two months' worth of expenses in a checking account, but many Americans aren't meeting this benchmark.

27% of Americans have less than $500 in their checking account, a recent CNBC Select and Dynata Banking Behaviors Survey found. Another 11% have a balance between $500 and $999 and 23% said they have between $1,000 and $4,999.

All of these figures are well below the $6,081 that the average American household spends in a month. About one third of survey respondents said they had more than $5,000 in their checking account.

Household income plays a role in how much Americans have in their checking accounts.

The majority of respondents with a household income less than $50,000 reported having less than $500 in their checking account, data from the survey revealed.

The median household income in the U.S. is $74,580, according to the U.S. Census Bureau, and 63% of those making between $50,000 and $74,999 reported having checking account balances of $4,999 or less.

Yet, for those making $200,000 or more, over half reported having at least $10,000 in their checking account.

Whatever your situation, it's best practice to avoid common banking fees and save smarter so you can meet your financial goals quicker.

What to do if you have a low checking account balance

When literally every dollar counts, you need to make sure your account is not costing you anything. Yet checking accounts from the big banks charge over $5 each month, on average, just to maintain an account — that's $60 each year.

Banks will often waive monthly service fees with a minimum balance requirement. But when that's not a possibility, there are no-fee checking accounts that don't charge a monthly maintenance fee, have no minimum balance requirement and don't require an initial deposit.

These no-fee checking accounts are available nationwide and have large ATM networks:

What to do if you have a high checking account balance

While it's not the case for the average American, it's possible to have too much cash in a checking account. What to be wary of? It could lead to overspending.

Scott Cole, a CFP at ColeFP and Wealth Management, shares a principle he talks about with his clients: Expenses expand to the income allowed. In other words, as your income grows your spending will rise along with it.

"If one considers checking as 'money to spend,' then one will almost naturally spend up to the limit whether the expense was actually a need or not," Cole explains. He cautions that having too much in a checking account may take away from some of the intentionality of spending and distract from other important and valuable things, like funding retirement, saving for a home and paying off credit card debt.

There's also the opportunity cost of getting higher returns on that money sitting in your checking account.

The national average APY on an interest checking account is just 0.07%. At that rate, any balance is earning next to nothing in interest.

A high-yield savings account is a good place to reroute some of that cash, especially as interest rates are around 5%, some even reaching 6% (albeit the latter with restrictions). A $10,000 balance in a checking account earning 0.07% APY would earn a measly $7 in a year. But that same amount in a high-yield savings account with 5% APY would pay $500 in interest in a year.

Here are some of the top high-yield savings accounts to consider for any excess cash in your checking account:

The CNBC Select Banking Behaviors Survey of 1,151 Americans across the country was conducted online from Sept. 8, 2023 to Sept. 19, 2023 by Dynata. Survey respondents were nationally representative by gender, age, race and ethnicity using 2020 Census data. Women represented 50% while men represented 49% of respondents and spanned a wide variety of incomes. All those surveyed were 18 or older. The margin of error for the survey was +/-3%.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every banking article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of banking products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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