Like the vast majority of people, you probably have a current bank account as well as one or more savings books.
do you know how much money you should leave in each of them?
The current account is a central part of our financial life.
It allows us not to have to store all our money under a mattress or in a cereal box but to place it in a secure account.
so the problem is that current accounts often have a very limited return.
It is therefore important to keep in mind that there are better places to put your savings.
How much can you keep in your current account to easily and safely manage your budget? Should you leave your money in your deposit account? We answer all these questions in this article!
The current account: the false friend of your finances?
You probably know that current accounts offer very low or, in most cases, non-existent interest.
Forget the idea of making the money in these types of bank accounts grow.
In fact, the only reason to use a current account is to avoid keeping all your money in cash.
This is all the more important when you consider that the French pay on average about 194$ in bank fees per year
– that is to say, fees paid directly to the bank in return for services rendered.
Among these fees, the bank card linked to our deposit accounts costs us an average of $64.
In order to limit these fees associated with having a current account, many online banks now offer accounts and cards without bank fees.
This is notably the case of N26, the most popular mobile bank in Europe,
whose basic option (which I use) is completely free.
How much money should I keep in my current account?
The goal of a current account should be to keep just enough money to pay all your bills and future expenses –
with a small extra margin in case of unexpected urgent expenses or to avoid an overdraft.
The rest of your savings should be safely placed in passbooks, savings accounts or investment solutions if your financial situation allows.
This will allow you to take advantage of systems that do not exist on current accounts,
such as the advantage of compound interest.
In addition, in most cases, current accounts are linked to a bank card, which makes the risk of fraud and scams higher than on other types of bank accounts.
Even if insurance and protections exist, it is best to keep the smallest amount possible in your account to avoid damage and to protect your money.
As long as you have enough in your account to cover one month’s expenses plus a precautionary margin, don’t hesitate to transfer the rest to a passbook.
With online banking and mobile applications, it’s now very easy (and mostly free) to make transfers between your different accounts.
Track your monthly expenses to find out exactly how much you should keep in your account.
We’ve seen that it’s important to know what your next expenses are going to be in order to know how much to keep in your deposit account,
but don’t make this estimate out of thin air.
Track your expenses through a monthly budget, so that you can get an average of what you spend per month,
(calculating at least the average over the last 3 months).
Once you have determined this amount, add about 30% security margin to avoid overdraft in case of unforeseen events.
For example, if you spend an average of 1080€ per month, that’s 1080 x 0.3 = 324$.
You should therefore keep on your account 1080$ + 324$ = 1404$
Where can I place money outside of my current account?
Many passbooks allow you to invest your savings and earn variable rates of interest on the amount invested,
For the so-called “regulated” savings books, the State defines the rate and the terms of investment,
The most common is the Livret A, interest-bearing savings account so that the funds remain available at all times.
The idea of being remunerated for letting your money sleep in a bank account may seem interesting.
But unfortunately, the good days of the savings account with attractive interest rates are far behind us.
Today, interest rates are still low for the very popular Livret A savings account.
On the other hand, even with historically low rates, it is better to benefit from an interest rate of 0.75% rather than…
no interest at all by leaving large sums of money in your current account.
Some other passbooks, such as the PEL, promise you higher returns in exchange for savings that are blocked for a certain period of time.
These rates can often be attractive and encourage the deposit of your savings.
On the other hand, it is still imperative to keep some of your money in easily accessible savings accounts.
A good practice is to keep there, when possible, between 6 to 9 months of expenses in case of an emergency or unforeseen event –
as well as the amount of future large expenses (if you plan to buy a new computer, for example).
For the rest, blocked savings should be considered, but also an investment in higher-yielding media.
While they can sometimes be scary, investment solutions generally pay off much more in the long term than savings books.
An interesting approach once you have sufficient funds to allow you to invest.
Tips to avoid bank account scams
Even if the current account is not the ideal investment to make your savings grow, it remains an essential part of your financial life.
It is therefore important to know how to use it optimally.
The security and protection of the sums you leave in your account must be a priority. Here are a few tips to avoid bank fraud:
Hide the keyboard well with your hand when you enter your confidential code. It may seem obvious, but in the rush, it is easy to forget it. However, ATM fraud persists.
If you have opened an account in a 100% online bank or if your traditional bank offers online services, consider setting up alerts for your important expenses.
For example, ask to receive a notification on your phone as soon as an expense of more than 50$ arrives.
This will allow you to keep an eye on possible irregular debits. Checking your accounts regularly also helps you control outgoing expenses, but automatic alerts are often much more convenient.
Scrupulously study the insurances and guarantees linked to your bank account in case of fraud. If your bank card is used fraudulently, you have the right to demand reimbursement of the amounts debited.
However, some deductibles may apply depending on your bank.
This is why it is necessary to read the conditions before choosing your bank account.
Never connect to your bank account via a link received by email or text message.
This is one of the most common bank scams. You receive an email or text message asking you to login to your bank to view a so-called message.
In addition to deleting any email that you think may be suspicious (or to report it on the CNIL website),
a good practice is to never click on the link in the content of your email,
but to connect directly from your browser to your bank’s website to view your account information.
On the internet, only shop on secure sites (with the padlock icon or the link starts with HTTPS).
Also, ask your bank to set up a two-step validation system. You will have to validate your online purchases on your smartphone before being debited