Bank Deposits--typical account balances for individuals?

[JamesSFO]

Ok, I've done some digging around the obvious places like the FDIC and the Federal Reserve and I'm just not finding this.

I'm wondering for typical transaction account what the distribution of account balances look like, e.g.: 10% of customers have <$1K, 30% have 1-3K, etc.

Anyone seen such a report/study?

[Batousai]

I recall reading something a while back. I don't remember the exact numbers but it was something dreadful like 50% of america has less than 1K in the bank or something.

[House Blend]

Have no idea what the overall distribution looks like but you might have better luck investigating credit unions and the NCUA.

Every quarter, my credit union publishes the total number of members, and the total assets under management.

As of Q2 in 2012, we're at an average of $9700 per member.

[plnelson]

Ok, I've done some digging around the obvious places like the FDIC and the Federal Reserve and I'm just not finding this.

I'm wondering for typical transaction account what the distribution of account balances look like, e.g.: 10% of customers have <$1K, 30% have 1-3K, etc.

Anyone seen such a report/study?

Define "typical". As House Blend illustrated, at his CU the average is $9700 per member. But an average is not very useful because you could have a few aggressive savers distort the average. If you had 10 savers and one of them had $91000, and each of the others had $1000, it would average out to $10,000 per saver, but that probably doesn't paint a very accurate picture. I suggest a median or modal value would be the best way to express "typical".

In my case I probably have about $100K in the bank, mostly in the form of a CD ladder for my "rainy day" fund. But for everyone like me there are probably many people who have less than $1000 in the bank.

[scrabbler1]

What is also deceiving about this is there are plenty of people who keep just enough money in the bank to meet minimum balances plus a cushion and invest the rest elsewhere, in stocks, bonds, mutual funds, real estate, etc. This is what I do so I rarely have more than $3k in the bank. Any time I had a surplus for any reason, I moved it out of the bank.

[sscritic]

The question was about transaction accounts. A CD at a CU is not a transaction account, nor are most bank money market accounts.

I'm wondering for typical transaction account

In the United States, transactions deposit is a term used by the Federal Reserve for checkable deposits and other accounts that can be used directly as cash without withdrawal limits or restrictions. They are the only bank deposits that require the bank to keep reserves at the central bank. This is in contrast to "time deposits" (aka term deposits).

Transaction accounts include all deposits against which the account holder is permitted to make withdrawals by negotiable or transferable instruments, payment orders of withdrawal, or telephone or preauthorized transfers for the purpose of making payments to third persons or others. However, accounts subject to the rules that permit no more than six preauthorized, automatic, or other transfers per month (of which no more than three may be by check, draft, debit card, or similar order payable directly to third parties) are savings deposits, not transaction accounts.

[JamesSFO]

The question was about transaction accounts. A CD at a CU is not a transaction account, nor are most bank money market accounts.

I'm wondering for typical transaction account

In the United States, transactions deposit is a term used by the Federal Reserve for checkable deposits and other accounts that can be used directly as cash without withdrawal limits or restrictions. They are the only bank deposits that require the bank to keep reserves at the central bank. This is in contrast to "time deposits" (aka term deposits).

Transaction accounts include all deposits against which the account holder is permitted to make withdrawals by negotiable or transferable instruments, payment orders of withdrawal, or telephone or preauthorized transfers for the purpose of making payments to third persons or others. However, accounts subject to the rules that permit no more than six preauthorized, automatic, or other transfers per month (of which no more than three may be by check, draft, debit card, or similar order payable directly to third parties) are savings deposits, not transaction accounts.

Also I was looking for a DISTRIBUTION as opposed to averages...

[SurfCityBill]

My guess is that the typical account holds well less than $1000.00. I base this on all the ads I hear on the radio and in the newspaper offering people whopping bonus' of $25 or something along those lines to open an account. These are not people with large balances.

-B

[KYBOSH]

Bogleheads wouldn't keep over $1k in a mere CHECKING account anyway....right?

[Sunflower]

What is also deceiving about this is there are plenty of people who keep just enough money in the bank to meet minimum balances plus a cushion and invest the rest elsewhere, in stocks, bonds, mutual funds, real estate, etc. This is what I do so I rarely have more than $3k in the bank. Any time I had a surplus for any reason, I moved it out of the bank.

+1

Guilty as charged!

[sscritic]

Bogleheads wouldn't keep over $1k in a mere CHECKING account anyway....right?

When my mortgage is greater than $1k and my credit card bills are greater than $1k, I had better have more than $1k in my checking account. Besides, my social security is greater than $1k, and guess where it goes every month? My monthly low is about $4k. But my grandmother beat me by a mile. She used to keep $5k at all times in her checking account, and that was in 1967 (roughly $25k in today's dollars).

[rec7]

Looks like it is about $1900 because there are two adults in an average family.
http://www.freemoneyfinance.com/2011/02 ... rican.html

[cheesepep]

My checking account has a high of X amount of dollars (X represents my paycheck value). That only lasts for 1 day before it falls to less than $50 as I move most of my money to savings (however low it may be) and investments.

[sscritic]

My checking account has a high of X amount of dollars (X represents my paycheck value). That only lasts for 1 day before it falls to less than $50 as I move most of my money to savings (however low it may be) and investments.

How do your bills get paid if all your money goes to savings and investments within 1 day? Do you just take out a bunch of cash on day 1 and use that for the rent/mortgage, groceries, gas, utility bills, etc.? I guess you could charge everything. Do you pay your credit card bill on day 1 before moving your money? You left that part out.

[HongKonger]

Bogleheads wouldn't keep over $1k in a mere CHECKING account anyway....right?

When my mortgage is greater than $1k and my credit card bills are greater than $1k, I had better have more than $1k in my checking account. Besides, my social security is greater than $1k, and guess where it goes every month? My monthly low is about $4k. But my grandmother beat me by a mile. She used to keep $5k at all times in her checking account, and that was in 1967 (roughly $25k in today's dollars).

Same here. And when checking and savings accounts pay the same 0.0001% interest as they do here - it makes no difference!

[jasonlitka]

Bogleheads wouldn't keep over $1k in a mere CHECKING account anyway....right?

My wife and I have the bulk of our pay deposited into a checking account so that we can pay our bills. The average balance is about $10K. If it dips too low (as it did a couple months ago due to a bathroom remodel) then we pull from savings. If it goes too high (say, $15K for more than a month) then I sweep some out to savings. When savings gets too high we move to the taxable account. When savings gets to low we stop spending so much money until it recovers...

[etselec]

I try to keep one paycheck's worth of funds in my checking account at all times. Last year that was $500 (yeah, I was not exactly making bank), this year it'll be more like $1000. I came up with this rule of thumb because one paycheck is about twice the size of the biggest check I routinely write (last year, utilities; this year, rent). I'd like to have enough cushion that I don't have to worry about overdrafts even when my rent and utility checks are outstanding and I need to pay my CC balance.

I have about a third of the paycheck immediately transferred to savings (half short-term/emergency, half Roth IRA), so when my checking balance gets bigger than usual that means I've been significantly under budget. I sweep half the extra $$ to savings, and spend the other half on travel, new clothes, or other fun things that aren't built into my budget.

[SteelyEyed]

I use my credit card to pay all bills and expenses. The checking account has between $0 and my paycheck in it most of the time. If it is just prior to the credit card payment date, I leave the paycheck there. If not, it gets transferred to savings.

Now, rewards checking on the other hand...those four accounts have the new house savings in them and are substantial.

[happymob]

Bogleheads wouldn't keep over $1k in a mere CHECKING account anyway....right?

Rewards checking... in our case, we are getting 2.5% interest on balances up to $25,000 (and 0.03% interest on anything above that). So yeah, we end up keeping around $25K in our checking account. Once CDs or money market rates exceed our rewards checking rate, we'll reevaluate where that money goes.

[nomadgecko]

3 guesses of places to look:

* Perhaps in publicly traded bank 10-K annual filings. In the company overview section there is often a lot of juicy details. Maybe BofA or Wells Fargo or the like has a simple table like that.

* Maybe mint.com or similar websites have some resources/papers about that.

* The reference desk at a very good public or university library and ask their advice.

[JamesSFO]

3 guesses of places to look:

* Perhaps in publicly traded bank 10-K annual filings. In the company overview section there is often a lot of juicy details. Maybe BofA or Wells Fargo or the like has a simple table like that.

* Maybe mint.com or similar websites have some resources/papers about that.

* The reference desk at a very good public or university library and ask their advice.

Good suggestions! thanks

[DetroitRed]

The Survey of Consumer Finances (SCF) would have this data - http://www.federalreserve.gov/econresda ... f_2010.htm . They ask total value of checking accounts held by household (variable name: CHECKING) and total value of savings accounts held by household (variable name: SAVING).

Unfortunately, you'd need to use the raw survey data to derive the answers yourself. That's not something that's easy to do (the documentation is confusing, you'd need to have experience using statistical software and you'd need to make sure you made weighting adjustments because the SCF oversamples wealthy households).

[JamesSFO]

The Survey of Consumer Finances (SCF) would have this data - http://www.federalreserve.gov/econresda ... f_2010.htm . They ask total value of checking accounts held by household (variable name: CHECKING) and total value of savings accounts held by household (variable name: SAVING).

Unfortunately, you'd need to use the raw survey data to derive the answers yourself. That's not something that's easy to do (the documentation is confusing, you'd need to have experience using statistical software and you'd need to make sure you made weighting adjustments because the SCF oversamples wealthy households).

Appreciate a lead to the data!

[JamesSFO]

Made it work! Didn't adjust for sampling etc, just basic histogram of the downloads.

The SCF website had an interactive tool for easy CSV/Excel downloads of data, grabbed checking/etc and pulled it in. I decided to combine checking, savings, mmkt, and CDs.

In short, 53% of households had <= $10K in checking + savings + mmkt + CDs.

Code: Select all

Bin	Frequency	Cumulative %
 $-   	14260	8.03%
 $1,000.00 	28394	24.02%
 $2,000.00 	13671	31.72%
 $3,000.00 	8815	36.69%
 $4,000.00 	6917	40.58%
 $5,000.00 	4851	43.31%
 $6,000.00 	4403	45.79%
 $7,000.00 	3728	47.89%
 $8,000.00 	3252	49.72%
 $9,000.00 	2770	51.28%
 $10,000.00 	2560	52.72%
 $25,000.00 	22586	65.44%
 $50,000.00 	15331	74.08%
 $75,000.00 	7982	78.57%
 $100,000.00 	5599	81.73%
 $125,000.00 	3933	83.94%
 $150,000.00 	3039	85.65%
 $175,000.00 	2237	86.91%
 $200,000.00 	1844	87.95%
 $225,000.00 	1427	88.76%
 $250,000.00 	1314	89.50%
 $275,000.00 	1234	90.19%
 $300,000.00 	959	90.73%
 $400,000.00 	3016	92.43%
 $500,000.00 	1827	93.46%
 $600,000.00 	1290	94.18%
 $700,000.00 	1287	94.91%
 $800,000.00 	856	95.39%
 $900,000.00 	663	95.76%
 $1,000,000.00 	563	96.08%
 $10,000,000.00 	6262	99.61%
More	695	100.00%

[talzara]

That's not even close to the actual distribution.

By "the SCF oversamples wealthy households", DetroitRed was not referring to some minor bias that needs to be tweaked. Rather, the SCF intentionally oversamples wealthy households. This is necessary because wealth is so intensely concentrated in this country, so a household-weighted sample would have very coarse resolution towards the top of the scale. At the top end, the SCF comes close to a dollar-weighted sample.

The SCF is divided into 7 strata.

Neither the stratum boundaries nor the sampling rates can be revealed. However, it can be said that the highest three strata correspond approximately to roughly the wealthiest two percent of tax filers.
http://www.bis.org/ifc/publ/ifcb28zzn.pdf

Thus, to really make sense of the data at all, you would need to load up the original data in Stata and reapply the weights.

Speaking very generally, we could wave our hands and say that they probably obtained roughly the same number of samples from each strata. In that case, the top 2% would make up 43% of the sample, which is not too far removed from the actual wealth distribution in the US. In that case, the unweighted 57th percentile would correspond roughly to the weighted 98th percentile. By your histogram, then, over 98% of households would have less than $25k in bank account balances. Indeed, I rather suspect that the bottom 98% holds less than $10k in bank balances.

[JamesSFO]

That's not even close to the actual distribution.

...

Thus, to really make sense of the data at all, you would need to load up the original data in Stata and reapply the weights.

Speaking very generally, we could wave our hands and say that they probably obtained roughly the same number of samples from each strata. In that case, the top 2% would make up 43% of the sample, which is not too far removed from the actual wealth distribution in the US. In that case, the unweighted 57th percentile would correspond roughly to the weighted 98th percentile. By your histogram, then, over 98% of households would have less than $25k in bank account balances. Indeed, I rather suspect that the bottom 98% holds less than $10k in bank balances.

Considering prior to this point I had absolutely NO useful data from the sites I was looking at, I would say this was helpful.

I agree that further analysis would be needed to use it for say policy arguments, etc.

[mickeyd]

Anyone seen such a report/study?

I don't know of such a study. Why not start a thread/poll here to find out?

[Johm221122]

Don't laugh, I only keep $150 in my local checking account

[rr2]

Don't laugh, I only keep $150 in my local checking account

Just out of curiosity -- what do you do when you have to write a check for over $150?

[Johm221122]

Don't laugh, I only keep $150 in my local checking account

Just out of curiosity -- what do you do when you have to write a check for over $150?

That's what left after paying bills,spending money and investments.In emergency I would transfer money from internet bank or sell something

[rr2]

Don't laugh, I only keep $150 in my local checking account

Just out of curiosity -- what do you do when you have to write a check for over $150?

That's what left after paying bills,spending money and investments.In emergency I would transfer money from internet bank or sell something

If you pay the above bills etc. from the checking account, then wouldn't the checking account balance have to be more than the total amount of the bills etc.?

[Johm221122]

Don't laugh, I only keep $150 in my local checking account

Just out of curiosity -- what do you do when you have to write a check for over $150?

That's what left after paying bills,spending money and investments.In emergency I would transfer money from internet bank or sell something

If you pay the above bills etc. from the checking account, then wouldn't the checking account balance have to be more than the total amount of the bills etc.?

Only on payday, pay bills with bill pay on line and send money to Roth.Take out spending money,leave $150.Repeat next payday

[stan1]

That's not even close to the actual distribution.

...

Thus, to really make sense of the data at all, you would need to load up the original data in Stata and reapply the weights.

Speaking very generally, we could wave our hands and say that they probably obtained roughly the same number of samples from each strata. In that case, the top 2% would make up 43% of the sample, which is not too far removed from the actual wealth distribution in the US. In that case, the unweighted 57th percentile would correspond roughly to the weighted 98th percentile. By your histogram, then, over 98% of households would have less than $25k in bank account balances. Indeed, I rather suspect that the bottom 98% holds less than $10k in bank balances.

Considering prior to this point I had absolutely NO useful data from the sites I was looking at, I would say this was helpful.

I agree that further analysis would be needed to use it for say policy arguments, etc.

Actually bad data is worse than no data. If your take away is that 47% of households have more than $10K in bank accounts you'd be very wrong. It doesn't matter whether you are using that number to formulate policy, write a term paper, or impress friends at a cocktail party.

[JamesSFO]

Actually bad data is worse than no data. If your take away is that 47% of households have more than $10K in bank accounts you'd be very wrong. It doesn't matter whether you are using that number to formulate policy, write a term paper, or impress friends at a cocktail party.

Actually in this particular case it is fairly helpful. Our take away is that AT LEAST 53% (and probably many more) have less than $10K in the bank. That is in fact accurate and can be useful. Similarly, way less than 47% of households have more than 10%, again useful.

[squirm]

everytime someone leaves their receipt in the ATM where I go, it's usually less than a grand.

[mickeyd]

I start off each month with $1000 in the checking account. All income flows into this account throughout the month and all bills are paid from the same account. At the end of the month, after I reconcile the checking account, I electronically transfer any balance that is over $1000 to savings and begin the next month as I started the last month.

It's so simple, it's silly.

[Sidney]

I start off each month with $1000 in the checking account. All income flows into this account throughout the month and all bills are paid from the same account. At the end of the month, after I reconcile the checking account, I electronically transfer any balance that is over $1000 to savings and begin the next month as I started the last month.

It's so simple, it's silly.

I do something similar but in reverse. Most of our spending goes on two credit cards and direct debit. The DDs hit the bank around the first of the month. By the last week of the prior month, I know what the balance due on the CCs is -- so I sell something at VG to cover the next month of cash needs and transfer it to the bank with an ACH transfer. By mid-month, the CC bills get paid and clear out most of the cash in the bank left over from the DDs.

[scrabbler1]

I start off each month with $1000 in the checking account. All income flows into this account throughout the month and all bills are paid from the same account. At the end of the month, after I reconcile the checking account, I electronically transfer any balance that is over $1000 to savings and begin the next month as I started the last month.

It's so simple, it's silly.

Sounds like we do pretty much the same thing. The one main difference, and I wonder if this happens to you, is if you have a bill which is not monthly so you have to plan ahead and carry over one month's surplus into the next one or the one after so you don't get caught short when the bigger bill comes in. Or do you simply transfer back from savings into checking to cover those bigger bills (which is what I did many years ago when I had a system even more similar to yours)?

[mickeyd]

Or do you simply transfer back from savings into checking to cover those bigger bills (which is what I did many years ago when I had a system even more similar to yours)?

That's what I do when I'm short, but I am usually over $1000. Since it's all electronic, it takes about 5 seconds to geterdone.

[stan_the_man]

Here's what I see as a potential problem with some of this data -- if you find it.

I just checked Mint, and DW and I have 6 checking accounts total.

3 - Less than $10

1 - $100 to $200

1 - $1,000 to $2,000

1 - $20K+ (it's a rewards checking account with a decent interest rate)

Our mean is $3K+, our median is $57.82, and our mode is less than $10.

Data can be skewed by not having a complete picture of the person/household.

[cheesepep]

My checking account has a high of X amount of dollars (X represents my paycheck value). That only lasts for 1 day before it falls to less than $50 as I move most of my money to savings (however low it may be) and investments.

How do your bills get paid if all your money goes to savings and investments within 1 day? Do you just take out a bunch of cash on day 1 and use that for the rent/mortgage, groceries, gas, utility bills, etc.? I guess you could charge everything. Do you pay your credit card bill on day 1 before moving your money? You left that part out.

I usually bill to my credit card and pay it off in full when I receive my paycheck. The $50 cash is my emergency fund in case I do need cash. I put every penny into savings so I can earn more money (even if very little).