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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
na
March 29, 2013 at 12:39 am

We keep enough in to pay bills. This way they cant just take it when they want too.

Diana
March 28, 2013 at 4:10 pm

Liked that lemon ring

Joe American
March 28, 2013 at 3:21 pm

For all you Obama haters, let me tell you this. I was laid off my job making $40 4 years ago. Since then, I have not worked. Now, I own my own home, have food on the table, all my utilities paid, medical paid, etc. I am better off now than I was 4 years ago. Now I spend all day on the internet while you fools slave for nothing. Suckers...

Bob
March 28, 2013 at 3:18 pm

adsfasd

Mike
March 28, 2013 at 3:18 pm

I can see keeping 2 months living expenses in checking. There are many conservative mutual funds that earn way more than CD's or money market funds. It usually only takes a day to get your money out(provided you have you bank account connected to your investment house).

Sugeknight
March 28, 2013 at 1:28 pm

Nice, Brad.

Wealth distribution it is. I'll just quit my job so I can live the new American dream too. Anyone making $40K or less might as well quit their job. You're probably working too hard for nothing.
Soon, we can all be dependent on the Government!! woohooo!!!!!

Brad
March 28, 2013 at 12:59 pm

Obama? Really?

maybe the problem is that Bush and the GOP put in place a drug plan (that does not allow the government to bargain for the best price), and ran not one but two wars and still cut taxes twice.

Obama needs to clean up the mess the GOP made what you call a wealth distribution plan is simply making us pay for what we bought.

Now to the rest of it anyone who talks about smaller government and or drowning the government in a bathtub is a revolutionary and Me I am a patriot not some sniveling worthless greedy punk who wants to live it up as long as he doesn't have to pay the bill

Vet
March 28, 2013 at 12:39 am

The government already has plans to tax 401K accounts and saving accounts. It's Obamas wealth distribution plan.

give_me_a_break
March 27, 2013 at 10:41 pm

Given what we have seen in cyprus, perhaps its time to start taking that money out of banks entirely. Out of any sheep like institution that is subject to government fiat.

John
March 27, 2013 at 10:27 am

My checking account balance is high because I use it to hold funds we budget for. I have categories I fund, like vehicle insurance, vacations, emergency, and a few others. All income gets direct deposited and many monthly bills get paid from it automatically.

It is not our nest egg, however. That's what the managed IRA's are for, which are doing quite nicely.

Living the retirement dream because we started saving when we were young.