How to manage a bank account with a lot of money

Managing a bank account with a lot of money comes with unique challenges. You’ll need to navigate Federal Deposit Insurance Corporation (FDIC) insurance limits and decide whether to spread your funds across multiple institutions.

This guide will help you navigate these challenges with expert insights on how to choose and manage a high-balance bank account.

How do FDIC insurance limits apply to large deposits?

From 2001 through 2026, there were 571 bank failures, according to the latest figures from the FDIC. Since it’s unlikely but possible that your bank will fail, FDIC insurance is important. It can protect your hard-earned money and give you access to your funds, often within a few days.

The standard FDIC insurance limit is $250,000 per depositor, per insured bank, per ownership category. If you park $500,000 in your bank account, for example, you’ll exceed these limits and leave a portion of your funds uninsured. While you might be able to recover some of them through the receivership process, there are no guarantees.

Where high earners keep large cash balances

As a high-net-worth individual, you may choose any bank account, but there are some private banks that may be better equipped to handle your larger deposits, including:

• JPMorgan Chase Private Bank
• Bank of America Private Bank
• Wells Fargo Private Bank
• Citi Private Bank

Each of these banks has its own selling points, but many of them offer dedicated relationship managers, specialized services like portfolio management and travel planning, and higher FDIC coverage through multiple account structures.

Here’s a quick breakdown of how private banks compare to traditional retail banks:

What are the benefits of multiple bank accounts for high earners?

If you have a lot of money to store, spreading funds across multiple bank accounts is likely your best bet. Let’s take a closer look at the benefits of this strategy.

Enhanced FDIC protection

When you divide your money across several bank accounts and ownership categories, such as individual, joint, IRA, and trust accounts, you multiply the FDIC coverage available to you.

For example, let’s say you have $750,000 to deposit. You can add $250,000 to three different banks or stash the entire $750,000 in one bank. If you choose a single bank, you’ll leave $500,000 uninsured.

Diversification and risk management

The saying “don’t put all your eggs in one basket” applies to many aspects of life, including managing large sums of money. By placing funds across different banks and accounts, you can reduce overall risk.

If one bank announces a system outage or security issue, you’ll still have access to your money at other banks. This approach helps ensure resilience and is similar to what you may do when you invest.

Optimizing interest rates

Annual percentage yields (APYs) on high-yield savings accounts vary greatly. When you diversify your deposits and park your funds where rates are the highest, you can maximize your returns. Currently, online banks typically offer the most competitive rates as they have less overhead than traditional institutions.

Access to multiple banking perks

Most banks, especially those that cater to high-earners and high-net-worth individuals, offer a variety of perks, including welcome bonuses, relationship managers, premium banking services, and unique lending solutions. If you spread your money out, you may have more access to these benefits.

What are the drawbacks and challenges of managing multiple accounts?

As with any financial strategy, allocating your funds across several bank accounts comes with a few drawbacks, such as:

Increased complexity

It takes more time and effort to monitor multiple bank accounts than managing just one. This added complexity may also lead to reconciliation challenges during tax time and make it more difficult to track your overall cash position.

Minimum balance requirements

In general, premium bank accounts for high-net-worth individuals require you to maintain larger deposits of $25,000 to $100,000. If you don’t meet these requirements, you might face monthly fees and other penalties.

Potential for overlooked funds

When you have multiple bank accounts, it’s all too easy to forget about those you don’t use often. Overlooking these accounts may result in complications with unclaimed property and lost interest.

Relationship banking limitations

Financial institutions typically reserve their best rewards for the most loyal customers. If you divide your funds across different institutions, you may not qualify for top-tier perks and pricing on products like loans and mortgages. Additionally, you might receive fragmented financial advice that confuses rather than supports you.

When do multiple bank accounts make sense?

There are several situations in which using more than one bank account is advantageous, including:

Scenario 1: The business owner with irregular cash flow

If you’re a freelancer, solopreneur, or small business owner, your cash flow likely fluctuates on a regular basis. That’s why it may make sense to store operating expenses in one account, tax reserves in another, and personal funds in a third.

Key benefit: You ensure your money is clearly separated for different purposes and secure adequate FDIC protection.

Scenario 2: The pre-retiree building cash reserves

Spreading your funds across multiple bank accounts can be ideal if you’re a pre-retiree in the 55 to 65 age range with $500,000 or more in cash you hope to invest soon.

Key benefit: You keep your large sum of cash safe during a transition period and may be able to leverage CD ladders across several institutions.

Scenario 3: The high-income professional saving for a major purchase

Whether you’re a doctor, lawyer, executive, or high-earner in another field, dividing $300,000 or more to save for a property or other large purchase is a solid choice.

Key benefit: The FDIC will protect all your funds while you enjoy easy access to them.

Scenario 4: The conservative investor with emergency funds

As a risk-averse individual, you may feel more comfortable with 12 to 24 months of expenses in cash. If so, it’s a good idea to park it in several accounts.

Key benefit: You’ll gain sleep-at-night safety as all your money will be protected by the FDIC.

What are critical mistakes to avoid with large bank accounts?

To keep your large pool of money safe and secure, avoid these common pitfalls many high earners make.

Mistake #1 – Ignoring FDIC limits

You worked hard for your money so protecting it should be top of mind. Audit your account balances on a regular basis and if a single account exceeds $250,000, adjust it. Otherwise, a portion of your funds may be uninsured.

Mistake #2 – Choosing banks based only on convenience

While convenience is important when you’re a busy, hard-working professional, it’s not everything. Sometimes, it’s better to choose banks you’re unfamiliar with in exchange for better returns and perks. Do your research and select banks on security ratings, financial strength, and services, not brand recognition or proximity to your home.

Mistake #3 – Not utilizing account ownership categories

To lock in additional FDIC coverage, take advantage of the various types of accounts available, such as joint accounts, trust accounts, and IRAs. Work with a financial advisor to structure your accounts in a strategic way for your unique situation and goals.

Mistake #4 – Keeping too much in a non-interest-bearing checking account

Parking an excessive amount of money in a non-interest-bearing checking account can cost you in the long run. For example, if you keep $500,000 in a checking account with a 0% APY instead of a high-yield savings account with a 4.5% APY, you’ll miss out on $22,500 annually.

Move excess funds to high-yield accounts and only keep operational amounts in checking.

Mistake #5 – Failing to monitor account activity

It might seem time-consuming and inconvenient to keep tabs on your accounts, but doing so is essential. Ignoring them or only checking them when you feel like it can lead to security risks and other issues. Be sure to enable account alerts, review statements weekly, and use strong authentication.

Mistake #6 – Overlooking better alternatives

In some cases, you may benefit more from storing your money in a brokerage account with Securities Investor Protection Corporation (SIPC) protection, treasury securities, or money market funds with better risk-adjusted returns. Meet with a financial advisor annually to discuss different scenarios and hone in on the right strategy.

Bottom line: How to manage a bank account with a lot of money

If you consider yourself a high-earner or high-net-worth individual, regular financial reviews with a financial advisor are invaluable. An experienced advisor can help you determine how much of your money to keep as cash and how much to invest.

Ready to optimize your cash management strategy? Start by auditing your current account structure against FDIC limits.

Frequently asked questions

What happens if I keep over $250,000 in one bank?

If you store more than $250,000 in a single bank account, your funds may not be fully protected. The FDIC insures up to $250,000 per depositor, per insured bank, per ownership category.

Are all financial institutions FDIC-insured?

No, not all financial institutions offer FDIC insurance. Also, credit unions are insured by the National Credit Union Administration (NCUA), which is a separate organization.

What are the top bank accounts for high-net-worth individuals?

JPMorgan Chase Private Bank, Bank of America Private Bank, Wells Fargo Private Bank, and Citi Private Bank all support high-net-worth individuals. They offer dedicated relationship managers and additional FDIC protection.

How much should I keep in a bank account if I’m a high earner?

While most advisors recommend keeping no more than six to 12 months of expenses in cash, your situation might warrant more, especially if you’re the sole provider, risk-averse, or work for yourself.