Keeping money in a current account provides an immediate sense of security: capital is available, does not fluctuate in value and can be used at any time. This is why many people accumulate much more in their accounts than they actually need for everyday expenses and unexpected events. The problem is that cash is not truly “standing still”: even when the nominal balance remains identical, its economic value can decline over time. The main cost is therefore not seeing the balance fall, but discovering that the same amount buys fewer goods and services than a few years earlier.
The right question is therefore not whether keeping money in a current account is wrong. Some liquidity is essential. The real problem arises when liquidity significantly exceeds what is needed for everyday finances, planned short-term expenses and an emergency fund, without a specific reason to keep it entirely idle.
A current account is not designed as an investment
A current account is primarily a payment and cash management tool. It receives salaries, enables bank transfers, pays bills, supports debit cards and direct debits, and holds the money needed for short-term requirements. It is not primarily designed to generate returns.
This distinction matters because current accounts and investments are often improperly compared by asking which “earns more”. In reality, they serve different purposes. Liquidity ensures immediate availability; an investment generally involves accepting a certain level of risk and giving up, at least partly, immediate access to capital with the aim of obtaining a future return.
The problem arises when money that no longer serves a short-term purpose remains in the account. At that point, choosing not to put that capital to another use is itself a financial decision.
The first cost is inflation
Inflation is the general increase in prices over time. If prices rise faster than the return earned on your cash, money loses purchasing power.
In August 2026, ISTAT's national consumer price index increased by 3.3% compared with the same month of the previous year. The carry-over average inflation rate for 2026 was 2.9%.
This means leaving 10,000 euros entirely unproductive for a year does not necessarily produce a nominal loss: after twelve months, the balance could still be exactly 10,000 euros. But if the general price level has risen by 3%, those 10,000 euros will buy fewer goods and services.
The concept can be expressed through the real return, the return after accounting for inflation. Approximately:
If a sum earns 0% while prices rise by 3%, the real loss is approximately 3%.
The bank balance does not change, but what it can buy does.
An example with 50,000 euros
Imagine keeping 50,000 euros fully liquid and earning no interest. Suppose, solely for this example, that inflation averages 3% a year for five years.
After five years, the nominal balance would still be 50,000 euros, but buying goods that currently cost 50,000 euros would require around:
In today's purchasing power, the 50,000 euros available in five years would therefore be worth approximately 43,130 euros.
This does not mean almost 7,000 euros have “disappeared” from the account. It means the sum's purchasing power has decreased.
This is one reason why looking only at the nominal balance can be misleading. Wealth should also be assessed in real terms.
The second cost is the return forgone
There is also a less visible cost: opportunity cost.
In economics, opportunity cost is the benefit forgone by choosing one alternative over another. When a large sum is kept in a low-interest account, its opportunity cost is the return that capital could have generated through instruments compatible with your goals and risk level.
ECB data for July 2026 clearly show that not all bank liquidity earns the same return. In the euro area, the average rate on household overnight deposits was 0.28%, while new deposits with an agreed maturity of up to one year offered an average of approximately 2.10%.
This does not mean a person can necessarily obtain exactly these returns, or that a fixed-term deposit is always preferable to a current account. The data nevertheless illustrate a principle: significant differences exist between keeping money immediately available and temporarily giving up access to part of it.
For example, if 40,000 euros remained for a year in an account paying 0.3%, they would generate around 120 euros in gross interest. At a gross return of 2%, the same amount would generate around 800 euros. The difference would be approximately 680 euros gross in just one year.
Over longer horizons, the difference increases.
This does not mean all cash should be invested
At this point, however, it would be easy to make the opposite mistake: conclude that every unspent euro should immediately be invested.
That is not the case.
Liquidity serves a fundamental purpose. It covers ordinary expenses, unexpected events and all goals requiring money in the short term. Investing capital that might be needed in a few months can be much more dangerous than the return lost by leaving it idle.
The problem is therefore not liquidity itself, but liquidity without a purpose.
A rational financial structure should distinguish at least three categories: money needed for current expenses, money needed for foreseeable short-term goals and expenses, and an emergency fund. Only the portion exceeding these requirements should be considered for other possible uses.
How much money makes sense to leave in the account?
There is no figure that suits everyone. Saying an account should never exceed 5,000, 10,000 or 20,000 euros would be arbitrary, because two people can have entirely different needs.
Someone spending 800 euros a month and living with family may need far less liquidity than a household spending 4,000 euros a month, paying a mortgage, supporting two children and relying on a single income.
A more sensible approach starts with actual needs. The account can hold enough cash to cover current expenses for the coming months and an immediately available portion of the emergency fund. Any major expenses already planned should be added.
Imagine, for example, someone with essential monthly expenses of 1,500 euros who wants a six-month emergency fund. They would need reserves of around 9,000 euros. If they also expected 3,000 euros in certain expenses during the year, total requirements could approach 12,000 euros, in addition to normal operating cash.
If the same person had 60,000 euros in the account with no other short-term goals, it would be reasonable to ask what purpose the additional 40,000-45,000 euros serves.
Peace of mind still has value
Personal finance is not just mathematics. Someone may feel more comfortable keeping 20,000 euros liquid even if their expenses suggest 10,000 would suffice. From a strictly financial perspective, that choice may have a cost, but greater peace of mind is still a real benefit for that person.
The problem arises when the choice is not deliberate. Holding substantial cash after assessing its cost and nevertheless preferring greater security differs from leaving money idle for years simply because you have never considered the issue.
Personal finance should therefore not necessarily seek to maximise every possible return. It should seek to use money consistently with your goals and risk tolerance.
The account's return must be compared with inflation
Another frequent mistake is to regard any nominal return as positive.
Suppose an account pays 1% a year on cash. Capital may appear to be increasing. But if inflation were 3% during the same period, purchasing power would still decline.
The Bank of Italy uses precisely this type of example in its financial education materials: if a deposit earns 1% while inflation is 2%, the nominal sum is larger at year-end, but buys fewer goods than at the beginning.
It is therefore essential to distinguish between nominal return and real return.
Capital growing by 1% while prices rise by 3% is not actually increasing in purchasing-power terms.
Example: how much can leaving an excess 30,000 euros cost?
Suppose someone has 50,000 euros in their account and, after analysing expenses, their emergency fund and short-term goals, determines that 20,000 euros is sufficient.
That leaves 30,000 euros of excess liquidity.
For illustration only, assume two scenarios over five years:
- Scenario A: an annual return of 0.2%;
- Scenario B: an annual return of 2%.
After five years, ignoring taxes and costs, we would have approximately:
Scenario A: 30,301 euros
Scenario B: 33,122 euros
The difference is approximately 2,821 euros.
This does not mean the second scenario is automatically better, because risk, capital availability, contractual conditions and taxation might differ. However, it demonstrates that even apparently modest differences in returns produce tangible effects when applied to large sums over several years.
If the comparison involved long-term investments, potential returns might be higher, but risk and volatility would also increase. It is therefore incorrect to compare a current account directly with an equity investment without considering the time horizon and the capital's purpose.
Liquidity has a cost, but also a use
Discussing the “cost of liquidity” does not mean forgetting what liquidity provides. Unlike many other financial instruments, money in an account is immediately available and normally does not fluctuate in nominal value. This is valuable, particularly when the sum is needed in the short term.
Liquidity can therefore be viewed almost as insurance: some potential return is forgone in exchange for certainty that money will be available when needed.
The problem is paying for this “insurance” on far more capital than necessary.
Keeping 10,000 euros liquid because they are needed for emergencies and future expenses can be perfectly rational. Keeping 100,000 without any objective, simply because “at least it is safe”, carries a very different economic cost.
Inflation is not constant either
These calculations require avoiding another mistake: assuming future inflation will always equal today's rate.
The 3.3% recorded in Italy in August 2026 describes the price increase compared with August of the previous year; it is not a forecast for the next ten years.
Inflation may be very low during some periods and accelerate rapidly during others. The same applies to interest rates paid on deposits.
The ECB, for example, adjusts its policy rates over time in response to economic conditions and price developments. Since 16 September 2026, the Eurosystem's deposit facility rate has been 2.50%. This is not the rate a bank must pay its customers, but it influences general money market and banking conditions.
Cash management should therefore not be a decision made once and never reviewed.
Regular checks are more useful than a fixed threshold
Every few months, it can be useful to ask: how much money do I actually need over the next twelve months? Is my emergency fund adequate? Are major expenses planned? Has my employment situation changed? Have I accumulated new cash without an intended use?
If these questions reveal that a significant share of capital is not needed in the short term, it makes sense at least to consider a different use. The solution may be very conservative or more long-term, depending on personal needs. The point is not to automatically choose the highest-yielding investment, but to avoid leaving excessive capital unused without a specific reason.
Conclusion
Keeping money in a current account is not a mistake. Available liquidity is necessary, and the security offered by the account serves an essential role in everyday financial management.
The problem emerges when the amount far exceeds current expenses, future commitments and the emergency fund. In that case, capital may bear two costs simultaneously: the loss of purchasing power caused by inflation and the return forgone by keeping it in a low-yielding form.
The right question is therefore not “how much money can I leave in the account?”, but:
“How much of the money in my account really needs to be immediately available?”
Anything above that amount deserves at least consideration. It does not necessarily have to be invested, but should have a specific purpose.
Because economically, doing nothing with your money is also a choice.