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$12K in checking? You’re Lemon-ing

By Claes Bell, CFA · Bankrate.com
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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234 Comments
VegasDude
March 27, 2013 at 8:39 am

I lost a ton in my investment accts.. barely back to normal now.. So I keep the rest in my checking... and in my safe.. I've had my checking over 25k at times, and I feel much better

Knucklehead
March 27, 2013 at 8:04 am

It's not what you make, it's what you keep.

Sue Weaver
March 27, 2013 at 12:59 am

Mine checking acct balance is high too, because my paycheck direct-deposits into the checking. The debit card attached to that account also works as a standard VISA so it may be a big balance, then I charge an expensive trip or debit a car down payment (plus my rent check, in San Francisco, is pretty darn big) Why not? Interest on savings account is minimal and what CDs return is not worth tying it up for a year or two. Stock market could actually LOSE money, like my IRA did.

Joe
March 26, 2013 at 8:37 pm

Why do you try to coin a new word "Lemon-ing" based on a TV show that almost no one watches?

Joe
March 26, 2013 at 8:36 pm

Investing in stocks is a big mistake. Due to "diversity" and "afrimative action", most American and European corporations are a sad, incompetent joke full of idiots who can barely read or write. I know because I've worked at these corporations, and I wouldn't invest 10 cents in them.

Joe
March 26, 2013 at 7:17 pm

Have you seen the rates you can get with CD's or a savings account? I just looked it up and it is about 1% for the highest. I think bank of America has a savings account is offering 0.25 or so. Neither one of these even keeps up with inflation. I am surprised you didn't mention I bonds. They seem to have the best rate at 1.76 or so. It will tie up your money for a year, but this is still better than the one percent you would get from a 1 year CD. I think people are just looking at the available savings rates and don't think it is worth the effort of putting their money into something. I am not sure where you are finding these 2 percent savings accounts?

Dan W
March 26, 2013 at 7:10 pm

What? And let the gov steal it?

Johnny B. Goode
March 26, 2013 at 2:41 pm

Does it really matter either way?

Look at what's happening in Cyprus!

Corrupt governments can only obtain money to spend (to buy votes, pay off crony capitalist pals and stay in power) firstly by taxing actual wealth wherever they can find it.

After they run out tax money, they simply concoct a way to 'legally' steal citizens' remaining wealth through inflation, artificially depressing interest rates, or outright confiscation like we see in Cypress.

thecapitalalligator
March 25, 2013 at 11:41 pm

Put all of your money into the S&P 500 index fund, or better yet, let Warren Buffett invest it for you by purchasing Berkshire Hathaway stock. Keep adding to your holdings every month and 50 years from now you will have a large chunk of money.

raj
March 25, 2013 at 9:20 pm

i have lost lots of my money in stocks.. my advice to every one out there is that keep your money with you unless you have very strong urge to try your luck... most of people investing in stocks come out as loosers like me. the reason is also simple. there is a highly connected network of big forms who control the movements of markets around world. we cant compete them guys!!