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An emergency fund is a lump sum of money set aside to cover unanticipated expenses or financial emergencies that may happen.

Besides offering peace of mind, an emergency fund may help prevent you from having to rely on high-interest debt options like credit cards. Read on to learn more about what an emergency fund is and how to build one.

What Is an Emergency Fund?

The emergency fund definition is: Money set aside that you could use if you get an urgent, unexpected bill (like a medical expense or car repair) or endure a loss of income, such as job loss. It’s essentially a savings fund earmarked for unplanned expenses or financial emergencies.

A major home repair, like a leaking roof, is an example of an unplanned expense that typically needs to be dealt with right away. Losing a job is an example of a financial emergency that may cause a lot of stress if you don’t have an emergency fund to help pay for necessities and bills.

If someone doesn’t have an emergency fund and experiences financial difficulties, they might turn to high-interest debt. For instance, they may use credit cards or personal loans to cover expenses, which can lead to struggling to pay down the debt that’s left in its wake.

Why Do You Need an Emergency Fund?

An emergency fund can help protect you financially if and when an emergency happens.

Having an emergency fund with liquid assets you can access quickly, generally comes with a range of benefits. Below are some of the perks of having an emergency fund.

Preventing You From Going into Debt

There may be other ways to cover the cost of an emergency, such as using credit cards or pulling money from other savings, like retirement funds. But utilizing these options may come with high interest (credit cards) or early withdrawal penalties (certain types of retirement accounts).

Though there are many reasons for having an emergency fund, preventing debt is an important one.

Providing Peace of Mind

Another reason why it’s important to have an emergency fund is that living without a safety net may cause you to feel stressed. Thoughts about what would happen if you got hit with a large, unanticipated expense might keep you up at night.

Being prepared with an emergency fund, on the other hand, may give you a sense of confidence that you can tackle unexpected events without experiencing financial hardship.

Providing Finances During Unemployment

If you lose your job, applying for unemployment benefits, if you are entitled to them, may help you afford some of your daily expenses. However, these payments are generally not enough to cover your entire cost of living.

You could use your emergency fund to help cover the cost of everyday expenses — like utility bills, groceries, and insurance payments — while you’re unemployed.

Making Better Financial Decisions

Having extra cash set aside in an emergency fund helps keep that money out of sight and out of mind. Having money designated for emergencies may make you less likely to spend it on something else.

Also by having a separate emergency savings account, you’ll know exactly how much you have — and how much you might still need to save. This may be preferable to keeping a cash cushion in your checking account and hoping it will be enough.

In fact, in SoFi’s Banking Survey of 500 U.S. adults, 77% of respondents who have a savings account said they used it specifically for emergencies.

Recommended: Checking vs. Savings Accounts

How Much Should You Keep in an Emergency Fund?

When it comes to just how much to keep in an emergency fund. financial professionals often recommend having at least three to six months’ worth of basic living expenses set aside.

That may be a lofty goal considering that one recent study showed that about 37% of Americans would struggle to come up with $400 in an emergency scenario. And in SoFi’s survey, 45% of respondents said they have less than $500 set aside in an emergency fund. But it’s generally wise not to be caught short and to prioritize saving an emergency fund. You could start by aiming to achieve smaller goals, such as saving $500 or $1,000 and building from there.

Source: SoFi’s 2024 Banking Survey

Emergency Fund Statistics

Curious about how much other people have in their emergency funds? Here are some recent research numbers to know:

•   About 75% of people report having emergency savings.

•   46% have enough money to cover three months’ worth of expenses.

•   Just 19% of people in SoFi’s report said they have between $1,000 and $5,000 in emergency savings.

•   24% of people overall have no emergency savings at all.

•   37% of Americans said they couldn’t cover a $400 emergency expense, according to Federal Reserve data.

•   47% of U.S. survey respondents said they couldn’t cover a $1,000 emergency bill.

How Do You Build an Emergency Fund?

Stashing money aside for a rainy day is a vital part of financial health and one way of developing good money habits. And starting an emergency fund doesn’t have to be complicated. The following are some tips to start building an emergency fund.

1. Calculate Your Monthly Expenses

Make a list of all your expenses for the month, including housing, utility bills, food, student loan payments and car payments, credit card bills, and so on. Add up all those expenses to get a total.

2. Set a Savings Goal

Next, decide how much to save. One of the easiest ways to do that is to multiply the total amount of your monthly expenses (from the step above) by the number of months’ worth of savings you’d like to have (typically, at least three to six months). If the resulting amount seems overwhelming, you can start smaller and aim to save $500 or $1,000 first, then build up your emergency fund from there.

3. Automate Your Contributions

Once you’ve set up a bank account for your emergency fund, you can schedule automatic transfers into the account — from your paycheck or checking account, for instance. This way, you can grow your emergency fund automatically.

Where Should You Keep Your Emergency Fund?

A savings account is generally a good place to keep your emergency fund because the money is safe and easy to access. Opening a high-yield savings account may be an option to consider, since you can typically earn a higher APY (annual percentage yield) on balances than you would with a traditional savings account, while still maintaining convenient access to your money.

You might open a savings account at an online bank, or you could choose to open an account at a traditional bank and use its online banking features. Forty-eight percent of people say they use online banking daily, according to SoFi’s data.

You may wonder about putting the money into a certificate of deposit (CD) account instead or investing it in the market. But there are issues with those options. A CD is a time deposit, meaning you agree to leave your savings in the account for a set amount of time until the CD matures. If you need to withdraw money from a CD in an emergency before maturity, your bank may charge you an early withdrawal penalty.

And while investing an emergency fund money in the stock market might earn a higher rate of return compared to a savings account, returns are not guaranteed. An individual is taking a risk with that money, since a downturn may reduce their investment’s value.

How Long Does It Take to Grow an Emergency Fund?

Saving enough money in an emergency fund to equal three to six months’ worth of typical living expenses can take some work and time. Here’s an example to consider: If your monthly costs are $3,000, you would want to have between $9,000 and $18,000 set aside for an emergency, such as being laid-off.

•   If your goal is $9,000 and you can set aside $200 per month, that would take you 45 months, or almost four years, to accumulate the funds.

•   If you can put aside $300 a month, you’d hit your goal in 30 months, or two and a half years.

•   If you can stash away $500 a month, you’d have $9,000 saved in one and a half years.

How Can You Grow It Faster?

Saving gradually is one way to build a cash cushion should an emergency hit. Here are some ways to potentially save even faster:

•   Putting a windfall into your emergency fund. This could be a tax refund, a bonus at work, or gift money from a relative.

•   Selling items you don’t need or use. If you have gently used clothing, electronics, jewelry, or furniture, you might sell it on Facebook Marketplace, Craigslist, or eBay.

•   Starting a side hustle. One of the benefits of a side hustle is bringing in extra cash; it may also be a way to explore new directions, build your skills, and fill free time.

Recommended: Emergency Fund Calculator

Prioritizing Your Emergency Fund When You Have Other Financial Obligations

Many people have competing financial goals: paying down student debt or a credit card balance; accumulating enough money for a down payment on a house; saving for a child’s college fund; and socking away money for retirement, for example. In many cases, you’ll see variability in financial goals by age, but there are often several needs vying for your dollars at any given time.

Potential ways to allocate funds include:

•   Starting or continuing to save toward your emergency fund. Even if you can only spare $25 per month right now, it could get you on the road to hitting your goal. Otherwise, if an emergency were to strike, you might have to resort to high-interest credit cards, or tapping any retirement savings, which may involve a penalty.

•   Continuing to pay down high-interest debt, like credit card debt. Paying more than the minimum balance due, if possible, may help you chip away at the debt a little faster.

•   Regularly paying other debt on time, such as student loans and mortgages.

•   Funding your retirement savings as much as you can. As with an emergency fund, even a small amount could help you work toward your future goals.

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The Takeaway

Building an emergency fund is an important financial goal. It’s generally ideal to aim for at least three to six months’ worth of basic living expenses, which may help you feel more secure if a major unexpected expense pops up or a job loss happens. Putting emergency funds in a savings account, such as a high-yield savings account, could help deliver both liquidity and interest.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, named the #1 Bank in the U.S. for the fourth year in a row by Forbes (2026).* Enjoy up to 3.10% APY on SoFi Checking and Savings.

FAQ

Can I use an emergency fund for a non-emergency expense?

Technically, yes, you can use an emergency fund for a non-emergency expense. After all, it’s your money. But it defeats the purpose of saving this cash in case you need it. If you use your emergency funds to pay for a vacation or new clothes, for example, then if a true emergency arises, you may not be prepared.

How do you rebuild an emergency fund after using it?

It can be difficult to rebuild an emergency fund, just as it was to accumulate the money in the first place. But you can do it in the same way. For instance, put as much money into your emergency savings account every month as you can. Set up automatic transfers so you don’t even have to think about it. Put any “found” money like a bonus you got at work, a tax refund, or a monetary gift from a relative into the emergency fund. You might also consider starting a side gig like dog walking to earn extra money to contribute to your fund.

What are some emergency fund examples?

Examples of when you might need to use the money in your emergency fund include losing your job and needing money to help pay your expenses and tide you over, a bill for an unexpected medical procedure, or a major home repair that can’t wait, like a leaking roof. These are all instances when you may need the cash in your emergency fund to help you cover the expenses.

Should I pay off debt or build an emergency fund first?

If possible, paying off debt and building an emergency fund at the same time can be a wise strategy so that you can save and chip away at debt simultaneously. Even if you can put $25 or $50 in your emergency fund each month, it can start to add up, while paying off your debt, especially high-interest debt, may help you become more financially secure. If you can only do one of these things, however, it generally makes sense to focus on your high-interest debt. Paying down your debt could then free up funds to start putting into your emergency savings.

Is an emergency fund the same as a savings account?

No, an emergency fund and a savings account are two different things, though you may keep your emergency fund in a savings account. An emergency fund is a lump sum of money designated specifically for emergencies like a sudden medical situation or serious home or car repairs. A savings account is a type of bank account in which you keep cash for various needs. A savings account might hold money you need to access for daily spending and bills, for instance. And you might open a second savings account to hold your emergency fund.

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This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2026 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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If you’re no longer being well-served by your current savings or checking account, it may be time to make a switch. Perhaps you’re moving and need a bank with closer branches or ATMs. Or maybe you’re looking for a new account that pays a higher annual percentage yield (APY).

Whatever the reason, while closing a bank account generally isn’t complicated, taking certain steps may help prevent hassles and possible fees. Here’s what you need to know about how to close a bank account.

6 Simple Steps to Closing a Bank Account

While closing a savings or checking account is generally a simple process, it requires more than just contacting your bank. There are a series of steps you’ll want to follow to ensure a smooth transition as you switch bank accounts. Here’s how to close a bank account.

Step 1: Decide Where You Want to Keep Your Money

Before you end one banking relationship, it’s a good idea to have another place lined up to stash your money. You may be able to increase your APY and reduce the cost of banking if you research your options. For example, high-yield savings accounts frequently have APYs of 3.00% or more as of early September 2026 — that’s many times higher than the current average national average rate of 0.38% APY.

If you have multiple financial goals and needs, you may want to have different types of bank accounts. For example, you might open different savings accounts for different objectives, such as one earmarked for an upcoming vacation or large purchase and another for your emergency fund, as well as a checking account. Just keep an eye out for any fees.

Step 2: Update Any Automated Transactions

If you have any direct deposits or automatic payments set up, you’ll need to move them to the new account whether you’re opening a checking account or a savings account. Check with your employer regarding any forms you need to fill out for direct deposit so your paycheck can be rerouted to the new account.

It’s also a good idea to comb through your statements and create a list of monthly recurring payments, such as automatic payment for loans, insurance policies, credit cards, streaming services, and the like, as well as annual subscriptions. A failed automated payment or negative account balance could trigger penalties.

Step 3: Move Your Money

Once your automatic payments are updated and any pending transactions have cleared, you can move your money out of your old account. However, the timing on this is critical: If an automatic payment or outstanding check goes through after you empty the account, you could end up overdrafting the account, which could trigger a fee.

Also, if your bank account has a minimum balance requirement, you may want to wait to transfer money out of the account until just before you officially close the account, so you don’t get hit with a fee due to a low balance.

Recommended: How Much Money Do You Need to Open a Bank Account?

Step 4: Monitor Your Old Account

After you’ve funded your new bank account, you can begin using it. However, you may want to keep your old account open for a couple of months as you transition to the new account, as long as it’s not costly to do so. This may help you catch any automatic transactions you forgot to change over.

Step 5: Download Your Transaction Records

Once your account is closed, you likely won’t have access to your transaction history and online statements. If you require any records of your banking activities under the old account (say, for tax purposes), you may want to download your documentation before you officially deactivate your account.

Step 6: Close Your Old Account

Once you’re set up and using your new savings account, you can close the old one.

The exact process for doing this will depend on your bank — some allow you to close a bank account online, while others require you to fill out an account closure request form or submit a written request. Be sure to follow your bank’s guidance on the proper method for closing an account.

If you still have money left in your account, typically, you should be able to request a transfer to your new account or receive a check by mail.

Because closed bank accounts may sometimes be reactivated in error and incur fees, it’s smart to get written confirmation of the account closure for your records. You’ll also want to carefully review your final bank account statement for any errors.

Common Reasons for Closing a Savings Account

Here’s a look at some reasons why you might want to close your current bank account and open a different one at the same or a different bank.

•   You’re moving and your current bank doesn’t have branches and ATMs near your new location.

•   Your bank’s hours don’t suit your lifestyle.

•   The bank has policies that don’t work for you, such as minimum balance and service fees.

•   You have multiple bank accounts and want to consolidate.

•   Another bank offers higher interest rates on savings accounts.

•   You want to change from a brick-and-mortar bank to an online bank.

•   You aren’t happy with your bank’s customer service.

•   You’re opening a joint account with a spouse or a joint bank account without being married.

•   You’re switching from a child account to an adult account.

Why It’s Important to Close a Savings Account Properly

Once you’ve decided you no longer want or need a certain bank account, it’s generally a good idea to properly close that account, rather than just let it sit unused. These are some of the reasons why this could be important.

Dormancy Fees and Other Penalties

Some banks charge account holders a “dormancy fee” after a period of time without any deposits or withdrawals. These fees may add up over time. Also, if your old bank account charges a monthly maintenance fee when your balance goes below a certain level, you could end up triggering that fee. If you have funds left in your unused savings account, these penalties might deplete them.

Fraud

If you’re not closely monitoring your old bank account, it may be more difficult to spot suspicious activity. Even inactive accounts contain personal information that could be exploited by identity thieves. Closing a rarely or never-used account may reduce the likelihood of your sensitive data falling into the wrong hands.

Lost Deposits

If you’ve signed up for direct deposits you don’t receive regularly — your yearly tax refund, for instance — you may forget that they were earmarked for an account you’re no longer actively using. And if a deposit is made into that account, you may not notice you received the payment.

While there are drawbacks to keeping an unused account open, you may also be wondering: Is it bad to close a savings account? The good news is, closing your account usually comes at no cost, as long as it’s not an account you recently opened within the last few months. Also, closing a bank account generally does not directly impact credit scores as long as the account is in good standing.

If, however, your account has a negative balance, you will need to repay that at the time of closing the account.

Recommended: What Happens to a Direct Deposit If It Goes to a Closed Account?

Closing a Joint Account

If you’re looking to close a joint checking or savings account, you’ll likely want to check with your bank about the correct procedure. Some banks require both parties to sign an account closure request or to request an account closure online.

Closing a Child’s Account

A child’s bank account is designed for kids under age 18. Typically, both the child and a parent or guardian act as joint account holders.

In some cases, a bank may automatically convert a child’s account into a regular account when the child turns 18. In that case, the child/now adult may be able to close the account on their own. If a parent or guardian is still the co-owner of the account, however, both parties usually need to request the closure of the account.

Closing an Inactive Account

An account may become “inactive” or “dormant” if its owner does not initiate any activity for a specific period of time, often two years. If your account has been marked inactive or dormant, you’ll typically need to reactivate it before it can be closed by the bank. Contact your bank’s customer service to reactivate your bank account. There might also be an option to do this online or through your mobile banking app.

Closing the Account of Someone Deceased

Closing the bank account of a loved one who has passed away is generally more complicated than closing your own bank account. Typically, the first step is to let the bank know of the account owner’s death. To do this, you may need to supply an original or certified copy of the death certificate and, possibly, other documents. The bank may then freeze the account, and stop any standing orders or direct debits.

When you’ve notified the bank about the death, they can let you know what the next steps will be and what other documentation they may need to officially close the account.

How Long Does It Take to Close a Bank Account?

If your bank account has a zero or positive balance and there are no pending transactions, closing a bank account is generally a quick process. Typically, the bank can close the account as soon as you make the request. If there are still pending transactions or unpaid fees, however, the process can take longer. You will likely need to wait for deposits or payments to fully clear and/or bring the balance into positive territory before you can close the account.

Can You Reopen a Closed Bank Account?

Generally, once a bank account is closed, it can’t be reopened. However, it may be possible to reopen a closed account if it was closed due to inactivity. Also, some banks reserve the right to reopen an account if another payment or deposit comes through.

When closing your account, it’s a good idea to ask the bank about their policy on transactions after an account is closed. If you find out that an old account was reopened due to a new transaction, you’ll likely want to withdraw or add funds and then close the account again. Be sure to update the person who billed or paid you with your new bank account information.

Does Closing a Bank Account Hurt Your Credit Score?

Closing a bank account will generally not have an impact on your credit if the account is in good standing. Bank accounts are different from credit card accounts and aren’t part of your consumer credit reports. Banks report account closures to the consumer reporting agency ChexSystems, which collects information about bank accounts that are closed. Opting to close a bank account typically won’t have a negative impact on your ChexSystems report as long as the account was not closed for negative behavior like repeated overdrafts.

The Takeaway

Even if you’ve been with the same bank for years, it’s typically worth reviewing your current savings and checking accounts from time to time to ensure that they meet your financial needs.

If you find an account that offers a higher APY on your deposits and/or charges lower or no fees, it may be well worth making the switch. Closing a bank account is usually a simple process and in most instances, there are typically no fees involved.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, named the #1 Bank in the U.S. for the fourth year in a row by Forbes (2026).* Enjoy up to 3.10% APY on SoFi Checking and Savings.

FAQ

Does it cost money to close a bank account?

Typically, no. The one exception is if you close your account soon after opening it. Some banks charge something called an “early account closure” fee (ranging from $5 to $50) if a customer closes their account within 90 to 180 days of opening it. However, many banks and credit unions don’t charge early account closure fees. Check the institution’s policy before opening an account.

Can you close a bank account at any time?

Yes, you can request to close a savings (or checking) account any time. Just keep in mind that some banks charge what’s known as an early closure fee if an account holder closes their account within 90 to 180 days of opening it.

What happens when you close a bank account with money in it?

If you close a bank account but still have money in the account, you should receive a check from the bank for the remaining funds.

Can a bank close my account without my permission?

Yes. Banks generally have the right to close a bank account based on their policies. Reasons that a bank might close an account include no activity on the account for a period of time, a large number of overdraft fees or bounced checks, a zero or negative balance on the account, or if the account has been flagged for fraud or suspicious activity. Contact your bank to find out the reason the account was closed and what you might do to reopen it. If you feel the account was wrongly closed, you can file a complaint with the Office of the Comptroller of the Currency.

Should I leave a small balance when closing an account?

No, you generally should not leave a small balance when closing a bank account. Leaving a small amount of money does not keep an account active. Instead, transfer your funds out of the account, bringing the account balance to zero.

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This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2026 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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A checking account serves as the primary hub of your day-to-day finances. Paychecks get deposited into it, bills are paid from it, and debit card purchases draw directly from the account balance. Because so many transactions flow through a checking account, it’s important to know how to manage it effectively; even minor mistakes can quickly compound into costly fees and financial stress.

From monitoring your balance to taking advantage of digital banking tools, these seven expert tips will help you take full control of your checking account.

Why Is It Important to Manage Your Checking Account?

Managing your checking account is the foundation of strong personal finance. Regular tracking helps you monitor spending, minimize costs, and catch potential fraud early.

Here are four key benefits of proactive account management:

•   Avoid expensive fees: If you accidentally spend more than your available balance, you can face steep overdraft or nonsufficient funds (NSF) fees. Bounced checks can also trigger steep penalties from both merchants and banks. In addition, maintaining a minimum balance often waives standard monthly maintenance fees.

•   Detect fraud and errors early. Reviewing your online account or monthly statements allows you to catch unauthorized charges before they cause major damage. Financial institutions and merchants also occasionally make processing errors.

•   Ensure bill accuracy. Regular tracking can help ensure subscription services do not overcharge you. It can also reveal forgotten subscriptions on auto-renewal that you no longer use.

•   Control daily spending: Tracking your cash flow shows exactly how much money you can safely spend. Knowing your precise balance can help curb the urge to make costly, unplanned purchases.

What follows are seven simple ways to manage your checking account.

1. Know Your Account Balance

Knowing your checking account balance is a key part of managing your money. Your bank may show both a current balance and an available balance. The current balance reflects transactions that have posted to your account, while the available balance typically accounts for certain pending transactions and holds that can affect how much money you can use.

For day-to-day spending, your available balance is generally the more useful number. Just keep in mind that it may not reflect every transaction immediately. For example, a purchase you just made may not have been submitted by the merchant yet. In addition, any checks you wrote may not yet have been deposited or cashed by the recipient.

How Do You Manage a Checking Account Balance?

It’s a good idea to check your account regularly rather than waiting until the end of the month. Depending on how frequently you use the account, you might review it every few days or once a week.

When reviewing your account, you’ll want to look for:

•   Recent deposits and withdrawals

•   Pending debit card transactions

•   Checks that haven’t cleared

•   Bank fees

•   Unfamiliar transactions

You can also compare your transactions against your own records, such as a budgeting app, spreadsheet, or check register. If something doesn’t look right, you’ll want to contact your bank right away.

2. Download Your Bank’s Mobile Banking App

Mobile banking can make managing a checking account significantly easier. Instead of waiting for a monthly statement, you can typically view account activity, transfer money, deposit checks, and manage certain account settings right from your phone.

Many banking apps also offer alerts. Depending on the bank, you may be able to receive notifications when your balance falls below a certain threshold, when a deposit arrives, or when a debit card transaction occurs. These tools can make it easier to stay aware of your account without having to log in manually every day.

Mobile banking can also give you faster access to your bank if you notice a problem. For example, some apps allow you to lock your debit card if you suspect it’s been lost or stolen.

3. Avoid Paying Extra Fees

Checking account fees can add up quickly. It’s a good idea to review your account’s fee schedule so you understand what you may be charged and what requirements may apply to avoid fees. Common checking account fees can include ATM fees, overdraft fees, monthly maintenance fees, wire transfer fees, and foreign transaction fees.

Avoiding Overdraft and Maintenance Fees

Overdraft and monthly maintenance fees are two checking account costs you may be able to eliminate by understanding your account’s terms and monitoring your balance.

You may be able to avoid overdrafts by keeping track of your available balance and pending transactions, particularly before making large purchases or when automatic payments are scheduled. You might also consider enrolling in account alerts that notify you when your balance falls below a certain amount. Some banks offer overdraft protection options, although these services may have their own terms or fees.

Monthly maintenance fees may be waived if you meet certain requirements, such as receiving qualifying direct deposits or maintaining a certain minimum balance. If you don’t consistently meet those requirements, consider whether a checking account with no monthly maintenance fee might be a better fit.

Also look at other fees associated with your account, such as out-of-network ATM charges. Understanding how you use our checking account can help you identify which fees you can avoid and whether another account may better suit your needs.

Recommended: What Is Cardless Withdrawal?

4. Automate Deposits and Payments

Automation can reduce the amount of routine account management you have to do manually.

If your employer offers direct deposit, you can have your paycheck sent straight to your checking account. From there, you can set up automatic payments for regular expenses like rent, utilities, insurance, or loans. This helps you avoid missed due dates and late fees. You might also automate savings by setting up a recurring transfer from your checking account to your savings account to help you work towards your goals.

Just keep in mind that automation generally works best when you monitor your balance regularly. An automatic payment can still fail or trigger fees if your account lacks sufficient funds on the transaction date. To protect yourself, you might keep a cash cushion in your checking account for recurring bills and unexpected expenses. How much to keep will depend on your income, spending, and financial situation.

It’s also a good idea to review your automated bill payments periodically. This gives you a chance to pick up any price increases and cancel any unused subscriptions.

5. Embrace Potential Earnings

While checking accounts aren’t generally known for paying high interest, there may be ways to earn some money on your balance.

For example, some financial institutions offer interest-bearing checking accounts, while others offer rewards or cash-back programs. Requirements vary and may include using a debit card a certain number of times per month, receiving direct deposits, or maintaining a certain balance.

If you regularly keep a significant amount of money in checking, it may be worth comparing accounts that offer interest with those that don’t. Also consider whether keeping excess cash in checking makes sense for you. Money that isn’t needed for near-term expenses may be better suited to a high-yield savings account or another account designed for longer-term goals.

The goal isn’t necessarily to maximize every dollar in your checking account. Instead, consider whether your account structure gives you a reasonable balance between convenient access to your money and potential earnings.

6. Take Advantage of Checking Account Perks

Interest and rewards aren’t the only potential benefit a checking account can offer. Depending on the financial institution and account, you may find perks such as:

•   ATM fee reimbursements

•   Early direct deposit

•   Sign-up bonuses

•   Free or discounted wire transfers

•   Discounts on other financial products

•   No monthly maintenance fees

•   Access to budgeting or savings tools

Some checking accounts may offer these features automatically, while others require you to meet specific conditions. Before choosing an account based on a particular perk, be sure to read the terms carefully to make sure you would be able to reap the advertised benefits.

Also consider whether you’ll actually use the feature. A checking account with ATM fee reimbursement may be valuable if you frequently use ATMs, while the same perk may matter less if you rarely withdraw cash.

7. Consider Consolidating

If you have multiple checking accounts, consider whether you need all of them. Having more than one account isn’t necessarily a problem. You might maintain separate accounts for household expenses, personal spending, or a small business. But multiple accounts can also make your finances harder to track. Consolidating accounts may simplify things by giving you fewer balances and transaction histories to monitor. It can also make it easier to see how much money you have available.

Before closing an account, however, it’s important to review any direct deposits, automatic payments, subscriptions, and other transactions connected to it. You’ll want to move those transactions to the account you’re keeping and confirm that they’ve been updated before closing the old account.

You may also want to consider whether closing an account could result in the loss of a useful perk or trigger any fees.

How to Manage Bank Accounts With Digital Tools

Digital tools can make managing your checking account and other bank accounts easier. Your bank’s mobile app can provide a central place to monitor transactions, transfer money, deposit checks, and set up alerts.

You can also use budgeting software or spreadsheets to get a broader view of your finances. For example, you might categorize checking account transactions into housing, food, transportation, entertainment, and other expenses. This can help you see where your money is going without relying solely on your bank statement.

While digital tools can help you stay informed, they don’t necessarily mean you can be completely hands-off with your checking account. Automated payments, alerts, and transfers can make financial tasks easier, but it’s still important to review your accounts periodically.

The Takeaway

Managing a checking account doesn’t have to be complicated. You might start by regularly monitoring your balance and transactions, then use tools such as mobile banking, account alerts, direct deposit, and automatic payments to make routine tasks easier.

It’s also worth reviewing your account’s fees, potential earnings, and available perks to make sure they fit the way you manage your money. If you have multiple accounts, consolidating them may simplify your finances.

With a consistent routine and the right digital tools, you can make your checking account easier to monitor and better suited to your everyday financial needs.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, named the #1 Bank in the U.S. for the fourth year in a row by Forbes (2026).* Enjoy up to 3.10% APY on SoFi Checking and Savings.

FAQ

Why is it critical to manage your checking account?

Managing your checking account can help you avoid overdrafts, catch unauthorized transactions, minimize fees, and keep track of upcoming payments. Regularly reviewing your balance and transaction history can also give you a clearer picture of your cash flow. This can make it easier to ensure you have enough money available for bills and everyday expenses. In addition, good account management can help you identify whether your checking account’s fees, features, and benefits still fit your needs.

How often should you manage your checking account?

It’s a good idea to check your checking account regularly, such as several times a week or at least once a week. These quick check-ins allow you to check your balance, recent transactions, pending charges, deposits, and scheduled payments. It’s also important to review your account statements each month. Regular monitoring can help you spot errors or unauthorized activity sooner and make it easier to avoid spending money that’s already committed to upcoming payments.

How should you keep track of what’s in your checking account?

You can keep track of your checking account by regularly reviewing your balance and transaction history through your bank’s website or mobile app. Consider recording deposits, purchases, automatic payments, and other withdrawals in a budgeting app, spreadsheet, or check register.

When reviewing your checking account, it’s important to pay attention to pending transactions because your current balance may not reflect every transaction that will affect your available funds. Comparing your bank’s records with your own can also help you identify mistakes or unfamiliar transactions.

What is the best way to manage bank accounts together?

The best approach depends on how you use your accounts. Start by identifying the purpose of each account and reviewing its fees, features, and balance requirements. You might use one account for everyday spending and another for savings or specific financial goals. If you have several accounts serving the same purpose, consolidating them may make your finances easier to monitor. Digital banking tools can also help you view balances and transactions in one place, making it easier to manage multiple accounts.

What tools help you manage your checking account?

Several digital tools can help you manage a checking account. Your bank’s mobile app and website typically let you monitor balances, review transactions, transfer money, deposit checks, and manage alerts. Budgeting apps and spreadsheets can help you categorize spending and track your overall cash flow. Automatic payments and transfers can simplify recurring transactions, while balance and transaction alerts can help you stay informed about account activity. Using a combination of these tools can make routine account management more convenient.

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Photo credit: iStock/jroballo

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2026 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.
Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 5/28/26. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet. We do not charge any account, service, or maintenance fees for SoFi Checking and Savings. We do charge transaction fees for outgoing wire transfers, Instant Transfers, and global remittance transfers. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/. *Awards or rankings from Forbes are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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A cash management account (CMA) is a financial account that combines some of the features of checking and savings accounts and is typically offered by a brokerage firm or other financial services company. Like a savings account, a CMA typically pays interest on your cash. Like a checking account, it may offer checks, a debit card, or both. Many CMAs also make it easy to transfer money to a linked brokerage account.

CMAs can be convenient, but also have some potential drawbacks, including a lack of full-service banking features and limited access to in-person banking. Some may also pay less interest than dedicated high-yield savings accounts.

Is a CMA right for you? This guide explains how cash management accounts work, their pros and cons, and what to consider before opening one.

What Are Cash Management Accounts?

Cash management accounts (CMAs) generally combine features of checking and savings, with the added features of linking to a brokerage account. Depending on the provider, you may be able to earn interest on your cash, spend using a debit card, write checks, and transfer money to and from other accounts.

CMAs are typically offered by brokerage firms and other nonbank financial services companies. Some providers charge low or no account fees, while others may charge for certain services or require a minimum balance to avoid fees. The company may also offer other financial products, such as brokerage, retirement, or financial planning services.

One potential benefit of a CMA is that you can manage your banking and brokerage accounts through the same company. This may make it easier to move money between accounts and keep track of your finances. However, a CMA may not offer every feature you would find at a traditional bank.

How Do Cash Management Accounts Work?

Cash management accounts generally function as a place to hold cash for day-to-day spending and short-term savings goals. Because they are often offered by nonbank financial service companies, however, they may work differently from regular bank accounts.

Some CMAs use a process called a cash sweep. Instead of keeping your cash at the company itself, the provider moves it into one or more partner banks. If those banks are FDIC-insured, the deposits may qualify for FDIC insurance, subject to applicable limits and requirements.

The company may also offer a debit card, checks, electronic transfers, or other way to access your money. If the CMA is linked to a brokerage account, you can generally transfer cash between the two accounts through the same platform.

The specific features, interest rate, fees, and insurance arrangements vary by provider. Before opening an account, it’s important to review how your cash is held and what protections apply.

What Are the Pros of Cash Management Accounts?

Understanding the benefits of a cash management account can help you determine whether it fits your needs and financial goals.

Convenience

One of the biggest advantages of a cash management account is the ability to manage your banking and brokerage accounts through one company. A CMA may offer checking and savings features, along with the ability to move cash to a linked brokerage account.

Keeping your accounts in one place can make it easier to manage transfers, monitor balances, and organize your money. However, the convenience may come with trade-offs, such as fewer banking features or less competitive interest rates.

Traditional Banking Features

Many CMAs offer features you may expect from a checking account. Depending on the provider, these may include:

•   Debit cards

•   Checks

•   ATM fee reimbursement

•   Mobile banking

•   Direct deposit

•   Electronic transfers

Since features vary, you’ll want to make sure the account offers the tools you need before opening an account. For example, if you regularly deposit cash or use mobile check deposit, check whether those services are available.

FDIC Insurance and Sweep Networks

The Federal Deposit Insurance Corporation (FDIC) generally insures eligible deposits at FDIC-insured banks up to $250,000 per depositor, per insured bank, for each account ownership category. If a bank fails, FDIC insurance can protect eligible deposits up to the applicable limit.

Some CMA providers use sweep networks to distribute your cash across multiple FDIC-insured partner banks. This may allow you to receive more than $250,000 in total FDIC coverage, depending on the number of participating banks and how your accounts are structured.

What Are the Cons of a Cash Management Account?

CMAs also come with some potential downsides. Here are a few to keep in mind as you decide whether one is right for you.

Lower Interest Rates

While CMAs may offer better interest rates than traditional checking accounts, their yields are not always higher than those of dedicated high-yield savings accounts or some certificates of deposit (CDs).

If your primary goal is earning the highest possible APY on your savings, it may be worth comparing CMAs with online banks and credit unions. You may find a better place to keep your short-term savings.

Fewer Features

A CMA may not offer all the conveniences of a standard checking account, such as bill pay, mobile check deposit, or cash deposits. As a result, it may not fully replace a checking account.

Before opening a CMA, consider how you use your current bank account. If you need to deposit cash regularly, write checks frequently, or use other specialized banking services, you’ll want to make sure the CMA supports those needs.

No Physical Branches

Many CMAs are offered by online brokerages or financial technology companies, which means you often do not have access to brick-and-mortar locations. If you regularly deposit cash, need services such as cashier’s checks or safe deposit boxes, or prefer in-person assistance, this may be a significant disadvantage.

Cash Management Accounts vs Checking and Savings Accounts

Cash management accounts offer some of the same services as traditional bank accounts, but there are notable differences. Here’s a look at how they compare.

	Cash Management Account	Checking Account	Savings Account
Primary purpose	Managing cash, spending, and short-term savings	Everyday spending and bill payments	Saving money and earning interest
Interest	Often pays interest, but rates vary	May pay little or no interest	Usually pays interest
Debit card or checks	Often available	Often available	May be limited or unavailable
ATM access	May include a debit card and ATM fee reimbursement	Commonly available	May be available, but access varies
Brokerage integration	Often available	Usually separate	Usually separate
FDIC insurance	May apply to eligible deposits held at FDIC-insured partner banks	Applies to eligible deposits at FDIC-insured banks	Applies to eligible deposits at FDIC-insured banks

Considerations When Comparing Cash Management Accounts

If you’re thinking about opening a CMA, it’s a good idea to compare the account’s features, fees, interest rate, and how your money is held. Here are some factors to consider.

Customer Service

When you have a question or need help resolving an issue, customer service can make a difference. It’s wise to check the provider’s available support options, including customer service hours and whether you can speak with a representative. If the account is offered entirely online, find out how you can get help with issues involving transfers, debit cards, account access, or other transactions.

Minimum Balance Requirements

Some CMAs may have minimum balance requirements to avoid fees or qualify for certain features. Before opening an account, be sure to check whether there is a minimum balance and determine whether it fits comfortably within your financial situation.

Interest Rate and APY

If you’re primarily using a CMA to hold cash, you’ll want to compare its APY with those offered by other accounts. Keep in mind that rates can change, particularly for accounts with variable rates.

Also consider whether the rate applies to your entire balance or only to certain amounts and whether you need to meet any requirements to earn the advertised rate.

Fees

It’s a good idea to review the account’s fee schedule before opening a CMA. Potential costs may include monthly maintenance fees, ATM fees, wire transfer fees, or fees associated with other financial services.

An account with a competitive APY may not be the best value if its fees significantly reduce the benefit of holding cash there.

FDIC Insurance and Cash Sweeps

If FDIC insurance is important to you, you’ll want to understand exactly how the provider handles your cash. Find out whether funds are swept into FDIC-insured partner banks, which banks participate, and how much coverage may be available.

You might also consider whether you already have deposits at any of the participating banks because those balances may affect your total FDIC coverage at a particular institution.

Investment Services

Many CMA providers also offer brokerage or investment services. If you plan to use those services, you may want to consider the provider’s investment options, account fees, and other features separately from the CMA itself.

A CMA can make it convenient to move money between accounts, but convenience shouldn’t be the only factor when choosing a brokerage or investment provider.

Is a Cash Management Account a Good Fit for You?

A CMA may be a good fit for people who want to manage cash and brokerage accounts through the same company. The all-in-one nature of these accounts can make it easier to move money and keep track of your finances.

A CMA may also be worth considering if you hold a large amount of cash and want to explore whether a sweep network can provide additional FDIC coverage. However, coverage depends on the provider’s arrangements and applicable insurance limits. It’s important to review the details rather than assume all your cash is insured.

Active investors may also prefer a CMA to a traditional checking or savings account if they want to earn interest on uninvested cash while keeping it available for future investment opportunities.

However, a CMA may not be ideal for people who frequently deposit cash or rely on in-person banking services. If your primary goal is maximizing APY, a dedicated high-yield savings account may be a better option. In addition, combining spending, saving, and brokerage funds in one account may make it harder to track sub-balances and could lead to accidentally spending money intended for other saving or investing.

Recommended: 50/30/20 Budget Calculator

The Takeaway

CMAs offer a convenient alternative to traditional checking and saving accounts. Since investment firms often offer CMAs, they may allow you to manage your banking and brokerage accounts through one company. As with any financial product, there are pros and cons to these accounts. Determining whether one is right for you will depend on your money management style, the features you need, and your financial goals

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, named the #1 Bank in the U.S. for the fourth year in a row by Forbes (2026).* Enjoy up to 3.10% APY on SoFi Checking and Savings.

FAQ

What is the purpose of a cash management account?

A cash management account (CMA) is designed to help you manage cash for spending, saving, and other financial needs in one place. Depending on the provider, a CMA may offer features such as interest on your cash, a debit card, check-writing, ATM access, and electronic transfers. CMAs are often linked to brokerage accounts, making it convenient to move money between your cash and brokerage accounts. They can be useful if you want to manage banking and brokerage services through the same company.

What type of account is cash management?

A cash management account (CMA) is a financial account that combines features commonly associated with checking and savings accounts. CMAs are generally offered by brokerage firms and other nonbank financial services companies rather than traditional banks. Depending on the provider, a CMA may offer interest on cash, debit card access, check-writing, ATM access, and electronic transfers. Some providers also use FDIC-insured partner banks to hold customers’ cash.

Is a cash management account the same as a money market account?

No. A cash management account (CMA) and a money market account are different types of accounts. A CMA is typically offered by a brokerage or other nonbank financial services company and may combine checking, savings, and brokerage features. A money market account is a type of deposit account offered by banks and credit unions. Both may pay interest and offer easy access to your money, but their features, rules, fees, and insurance arrangements can differ.

Are cash management accounts safe from market losses?

It depends on where your money is held. Cash held in an FDIC-insured bank deposit through a cash management account’s sweep program may be protected from losses resulting from a bank failure, subject to applicable FDIC limits and requirements. However, money held in investments through a linked brokerage account can lose value. It’s important to understand whether your cash management account balance consists of bank deposits, investments, or another type of financial product and what protections apply.

Can I write checks from a cash management account?

Many cash management accounts offer check-writing privileges as one of their standard features. Providers may also offer debit cards, electronic transfers, ATM access, or other ways to access your money. If writing checks is important to you, be sure to check the account’s features before opening it. You may also want to review any limits, fees, or requirements associated with check-writing.

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Photo credit: iStock/MicroStockHub

This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2026 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.

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Just as lenders review your credit report when you apply for a loan, banks and credit unions may review a ChexSystems report when you apply for a new checking or savings account. ChexSystems is a specialty consumer reporting agency that collects information about checking and savings accounts and provides reports to financial institutions to help them assess the risk of opening an account for a consumer.

If your report contains negative information, such an account that was involuntarily closed with an unpaid balance, a history of returned checks, or suspected fraud, a bank or credit union may decide not to approve your application.

Below, we take a closer look at how ChexSystems works, what information it tracks, how to obtain and, if necessary, address information in your report, and how a ChexSystems report can affect your ability to open a bank account.

Understanding ChexSystems

ChexSystems is a nationwide specialty consumer reporting agency governed by the federal Fair Credit Reporting Act (FCRA). Banks and credit unions can provide ChexSystems with information about checking and savings accounts, particularly accounts that were closed because of suspected fraud, unpaid negative balances, or other account-related problems. ChexSystems uses this information to create consumer reports that financial institutions may use when evaluating applications for new accounts.

ChexSystems does not decide whether you can open a new bank account. The bank or credit union makes that decision based on its own policies and may consider information from ChexSystems along with other factors.

ChexSystems generally retains reported information for five years from the report date, although information may be removed sooner in certain circumstances. Paying or settling an accurate debt does not necessarily cause the information to be deleted. Instead, ChexSystems can update the account’s status to reflect that it was paid or settled.

Is ChexSystems Legit?

Yes. ChexSystems is a legitimate consumer reporting agency governed by the FCRA and overseen by the Consumer Financial Protection Bureau and the Federal Trade Commission. As a result, the agency must meet certain strict requirements, such as reporting information accurately and investigating disputes from consumers in a timely manner.

What Is in a ChexSystems Report?

A ChexSystems consumer report focuses on information related to your history with various types of savings accounts and checking accounts. It is different from a traditional credit report, which primarily tracks borrowing and repayment activity.

Information that may appear in a ChexSystems consumer file includes:

•   Checking and savings accounts that were forcibly or involuntarily closed

•   Returned checks reported to ChexSystems

•   Unpaid balances associated with closed accounts

•   Suspected fraud or other account-related problems

•   Records of inquiries made about your ChexSystems file

•   Records of check orders you have placed

Not every checking or savings account appears in a ChexSystems report. Open or active accounts and voluntarily closed accounts with no history of mishandling generally are not included in your ChexSystems consumer file.

What Is ChexSystems Used For?

Banks and credit unions may review your ChexSystems report when you apply for a checking or savings account. They use information in the report to help assess the risk of opening an account for you.

A negative item does not automatically mean you will be denied. Each financial institution sets its own policies, and some institutions may consider other information when making their decision. Depending on its policies, a bank or credit union may approve your application, deny it, or offer an account with different terms.

How to Get a Copy of Your ChexSystems Report

Under the FCRA, you are entitled to a free copy of your ChexSystems consumer disclosure report at least once every 12 months. You may also qualify for additional free reports in certain circumstances, such as after an adverse action based on information in your report.

You can request your report through the ChexSystems Consumer Portal, by phone, or by mail:

•   Online: Visit the ChexSystems website (ChexSystems.com) and use the Consumer Portal to request your consumer disclosure report.

•   By phone: Call ChexSystems at 800-428-9623.

•   By mail: Complete the Consumer Request for Disclosure form and mail it to Chex Systems, Inc., Attn: Consumer Relations, PO Box 583399, Minneapolis, MN 55458.

If a bank or credit union denies your application based on information from ChexSystems, the adverse action notice should identify the reporting company and provide contact information so you can request a copy of the report used in the decision.

Once you receive your report, be sure to review it carefully. You’ll want to look for unfamiliar accounts, incorrect balances, inaccurate dates, or other information that does not belong to you. If you find an error, you have the right to dispute it.

Recommended: What to Do When There Is a Bank Error Made in Your Favor

How to Clean Up Your ChexSystems Report

If your ChexSystems report contains inaccurate or incomplete information, you can dispute it with ChexSystems and the bank or credit union that provided the information. Providing supporting documentation, such as account statements or proof of payment, may help with the investigation.

ChexSystems says that reinvestigations are generally completed within 30 days, although there are some exceptions. If the information cannot be verified or is found to be inaccurate, it may be corrected or removed.

If the negative information is accurate, paying or settling the amount you owe may still be worthwhile. Contact the bank or credit union that reported the information to determine how to resolve the balance. After you pay or settle the account, keep documentation showing the payment. The financial institution can update the account’s status with ChexSystems, but it generally is not required to remove accurate information before the applicable retention period ends.

Does a ChexSystems Report Affect Your Credit Score?

A ChexSystems report is separate from your traditional credit report and does not directly determine your FICO® or VantageScore® credit scores. ChexSystems focuses primarily on checking and savings account history, while the major credit bureaus collect information about credit accounts, such as loans and credit cards.

ChexSystems also has its own Consumer Score, which ranges from 100 to 899, with a higher score indicating lower risk. However, financial institutions may use different scoring models or may consider the report itself along with other information when evaluating an application.

There can be an indirect connection between your banking history and credit. For example, if you leave a negative balance unpaid and the debt is later sent to a collection agency, the collection account could potentially be reported to a traditional credit bureau and affect your credit history.

Options if You’ve Been Denied a Bank Account Due to ChexSystems

If you’ve been denied a checking account because of information in your ChexSystems report, you have several options.

•   Review and address your ChexSystems report. Request a copy of your report and look for errors or unfamiliar information. Dispute inaccurate information with ChexSystems and the financial institution that supplied it. If you have an accurate unpaid balance, consider resolving it and asking the financial institution to update the account’s status.

•   Consider a second-chance bank account. Some banks and credit unions offer checking accounts designed for consumers who have had problems with previous accounts. These accounts may have additional fees, restrictions, or other requirements, but they can provide access to basic banking services while you work to establish a positive account history.

•   Consider a prepaid debit card. A prepaid debit card allows you to load money onto the card and use that balance for purchases or cash withdrawals. It’s not a checking account and generally does not provide all of the services associated with one, but it may provide an alternative for everyday spending. Some prepaid cards also offer direct deposit. Be sure to compare fees and features carefully before choosing one.

The Takeaway

ChexSystems is a specialty consumer reporting agency that collects information about checking and savings account activity and provides reports that banks and credit unions may use when evaluating new account applications. Negative information, such as an involuntary account closure or unpaid balance, can make it more difficult to open a new account, although ChexSystems itself does not make the approval decision.

You can request a free ChexSystems consumer disclosure report at least once every 12 months and dispute information you believe is inaccurate or incomplete. If negative information is accurate, paying or settling an outstanding balance may allow the account’s status to be updated, although it generally will not result in immediate removal of the information. Understanding what’s in your report can help you address problems and explore your banking options.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, named the #1 Bank in the U.S. for the fourth year in a row by Forbes (2026).* Enjoy up to 3.10% APY on SoFi Checking and Savings.

FAQ

What happens if you are on ChexSystems?

Being in ChexSystems does not automatically prevent you from opening a bank account. However, if your report contains negative information, such as an unpaid balance from a previous account or an involuntary account closure, a bank or credit union may deny your application or offer different account options. ChexSystems does not make the decision; each financial institution sets its own policies. If you are denied because of information in your ChexSystems report, you can request a copy of the report, review it for errors, and dispute inaccurate information.

Can you remove yourself from ChexSystems?

You generally cannot remove yourself from ChexSystems simply by requesting that your file be deleted. If your report contains inaccurate or incomplete information, you can dispute it with ChexSystems and the financial institution that provided the information. Accurate negative information generally remains for the applicable reporting period, although paying or settling a debt may allow its status to be updated. ChexSystems generally retains reported information for five years. Once information reaches the end of its retention period, it should no longer appear on your report.

How do I know if I am in ChexSystems?

The easiest way to find out is to request a copy of your ChexSystems consumer disclosure report. You are entitled to a free report at least once every 12 months, and you may qualify for additional free reports in certain circumstances. Your report will show information ChexSystems has in its file about you. You can request your report online through ChexSystems, by phone, or by mail. If a bank denied your account application based on ChexSystems information, the adverse action notice should also tell you how to contact ChexSystems.

How long does a person stay in ChexSystems?

ChexSystems generally retains reported information for five years from the report date. However, not every account or banking activity is reported to ChexSystems, and some information may be removed sooner in certain circumstances. Paying or settling an accurate debt does not necessarily remove it from your report, although the account’s status may be updated to show that it has been paid or settled. If you believe information should no longer appear on your report, you can request a copy and dispute information that is inaccurate or outdated.

Which banks do not use ChexSystems?

Some banks and credit unions may not use ChexSystems when evaluating new account applications, while others may use ChexSystems but have more flexible approval policies. Because financial institutions can change their account-screening practices, there is no permanent list of banks that never use ChexSystems. If you have a negative ChexSystems record, look for financial institutions that advertise second-chance checking or accounts that do not use ChexSystems. Before applying, check the institution’s current account requirements and whether it reviews ChexSystems or another specialty consumer reporting agency.

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Photo credit: iStock/atakan

This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2026 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.

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