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$12K in checking? You’re Lemon-ing

By Claes Bell ·
Thursday, February 21, 2013
Posted: 5 pm ET

We are all Liz Lemon.

In one of the early episodes of the recently concluded NBC series "30 Rock," Jack Donaghy, played by Alec Baldwin, asks Tina Fey's character Liz Lemon where she invests her money. She replies, sheepishly, "I have like 12 grand in checking."

But the latest numbers from the Federal Reserve reveal that Liz is far from alone in keeping a big chunk of her money in checking. Checking account balances have risen sharply since the financial crisis rocked markets and interest rates on certificates of deposit have fallen to all-time lows. Now, there is $902 billion sitting in American checking accounts, the highest it's been since the Fed began collecting data in 1959.

In fact, the amount of money sitting in checking accounts actually has exceeded the total amount in CDs since late 2011, which hasn't been the case since the early '70s.

Of course, you could always put your savings into a balanced portfolio of stocks and bonds designed to grow wealth over the long term. But if you're committed to keeping a ton of cash in a checking account, there are ways to earn a return.

Many online banks and credit unions offer high-yield checking accounts that can pay up to 2 percent annually on your checking account funds as long as you meet a few conditions such as making a minimum number of transactions per month.

If that doesn't work for you, you can always link your checking account to a high-interest online savings account.

What do you think? Do you have most of your money in a checking account? Are you earning any interest on it?

Follow me on Twitter: @ClaesBell

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That Guy Who Is Always Right
March 20, 2013 at 1:49 am

The real travesty here is that the writer missed that the 30 Rock joke was about Liz's retirement plan. In the correct context, "Lemon-ing" is "not having any retirement savings except for the money in your checking account".

March 20, 2013 at 12:13 am

There's nothing wrong with having cash at your disposal.Especially now,that the Government is so broke it cannot afford higher interest rates.Beware,however,that inflationary factors are eating away at the value of the dollar quickly. Be also advised that Junk silver coins are in a lull write now,and are a diversity that does not involve paper currency or stocks.Therefore,if paper should tank,silver will have value.The Fed has propped up the Stock Market with easily printed cash,and it leads to more inflation.Unfortunately,they also deny inflation.But,your President says to trust him.Do you?

Horrible Advice
March 20, 2013 at 12:08 am

Some horrible advice has been laid out here. The sound advice given ad nauseum is that you should have a 3-6 month emergency fund. For some people, $12K may roughly be enough. You want your emergency fund to be extremely secure and accessible. Bottom-line...don't stress because your $12K in your checking account isn't "working" hard enough for you. Hunting for that extra 1% will land you a whopping $120 a year. The guy who claims you can easily get a guaranteed 8% a year is full of it.

March 19, 2013 at 11:13 pm

@'re a self-made millionaire but you can't think of a better way to address someone than by using a tired, cliched, fraternity slinging word such as "bro." Monopoly money doesn't count.

Jambu Shambu (@jambu_Shambu)
March 19, 2013 at 7:22 pm

I'll bet all those Lemons slept pretty well in 2008 when stocks were losing 30, 40, 50% of their value.

March 19, 2013 at 5:41 pm

While your bank balance may be growing, you're actually LOSING money by keeping it in the bank when you factor in inflation. You think you are growing wealth but in truth you're getting poorer over time. There are very safe (no investment is 100% safe, but many of these are as close as it gets), secure investment vehicles that pay 8,10,12% and more annually, many with terms as low as 3 to 6 months. Why don't the banks or financial planners tell you? Because they don't get paid on them.

March 19, 2013 at 3:02 pm

I am a senior, sold small home recently & put $90,000. into an online savings acct., FDIC insured, & is earning 1% , compounded daily.
Best I could find.
Like everyone, I want it safe & liquid.
Also, looking for other same gauranteed but better rates , if anything does exist.
Any suggestions welcome.
Like reading Bankrate to be informed.

James (self made millionaire)
March 19, 2013 at 1:46 pm

I forgot to tell you guys this as well. Sean i know about FDIC insurance, and in a catastrophic economic downturn, no one can get all their money out of the bank "instantly". I have a home safe, and also (several) safety deposit boxes in "Strong, Reputable, Highly rated, sound Banks" I have those boxes full of cash, gold, silver. I keep over a million dollars in money market checking accounts to get a little higher interest yield, and enough money to live on for a few years in regular checking accounts. I also withdraw about $20,000 in cash every week from checking and put it into safe deposit boxes. If the market crashes, I'll have my money within reach in my home safe and also in safe deposit boxes. I wont have to wait 99 years to get to my money bro.

James (self made millionaire)
March 19, 2013 at 1:33 pm

The issue right now has to do with keeping your money safe in a FDIC insured bank account. Other typs of investments provide NO SECURITY in the event of the market crashing, or any economic downturn. The reason I keep all my money liquid now in a basic Checking or Money market account-(also a type of checking acct) is to keep it liquid and insured. Banks are not paying any decent interest rates, and they won't be anytime soon. I was earning 6% interest on almost all of my money until October 2012. I had it tied up in Certificates of Deposit paying me a 6% yeild. They were long term 8 year CD's. That was how i got the good interest. I knew the housing bubble would burst soon, and there would be reversals (earthquakes, tremors) in the stock market. The stock market is over rated now and the only thing banks can offer customers that pays anything decent 2%-3% yelds are not government insured, its all risk. I enjoyed the good interest i earned for the past 10 to 12 years. Now its time to keep my money close where i can get to it, if i see a good buy in land, or a house to buy, and then resell it, i do that. I make enough speculating on to justify keeping my money out of the market. I'm relying on myself for a yield instead of an investment planner, who are pushing the products they get the biggest commission on by selling it to you. The reason I prefer keeping my money in a checking account vs a savings account, is that I can always write a check to buy something instead of having to go to the bank, withdraw the money from savings then put it in checking to do something with it. Interest rates are low on both checking and savings accounts alike. It doesn't matter whether its in checking or savings, just keep it liquid, AVOID CD's right now!!

March 19, 2013 at 11:04 am

I keep between $5 - 10 K in my checking account pretty much all the time - the rest goes into savings account. But I still don't understand the angle of this article ... it doesn't tell me "why" there is an increase in keeping money in checking accounts vs savings accounts or if there is a better way to "keep my money close"... I too am worried about the savings I have ... it's not a ton of money, but it's all I've got. I sure don't want to take it out of the bank and stuff it in a mattress, and I ain't got the option of "long-term" investments. How do I use that money to make more without losing it all in the stock market or having to wait 20 years for investments?