Americans Stockpiling More Money in Checking Accounts

Americans squirreled away more money in their checking accounts in 2013 than they did at any time in the past 25 years, suggesting that they remain spooked by the Great Recession, a new report shows.

The average consumer's checking account carried a balance of $4,436 last year, according to Moebs Services, a Lake Bluff, Illinois-based collector of bank data on services, pricing and expenses.

That's up from $4,038 in 2012, but, historically, the average balance in such demand-deposit accounts is $2,100, said Michael Moebs, economist and chief executive.

Typically, if the economy is doing well, as measured by such factors as low unemployment, then the average balance in consumers' checking account falls to about $1,400, he said. That also helps banks' fee revenue because depositors tend to keep a smaller cash cushion, in turn becoming more likely to incur fees for overdrawing their checking accounts, for failing to keep balances above minimums, and for transferring money between accounts.

In 2007, for example, balances fell to $788 since household revenues were ample and the need for liquidity was just a paycheck or two away, Moebs said.

When unemployment is relatively high and consumers get nervous, however, checking balances get larger, to $3,000 or beyond, he said. That consumer liquidity also generates less fee income for banks, Moebs said.

But Moebs, who has been collecting such data for 25 years, said the only time that he has seen average balances exceed $4,000 were 2013 and 2012.

Moebs says $1.552 trillion sits in checking accounts and other demand-deposit accounts. Of that, $315 billion could be considered excess, he estimates.

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