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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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John M
April 10, 2013 at 2:01 pm

I have most of my money in my 401k account and will be retiring in a few years.

Now all I have to do is figure out a place to put my money where the Redistributor-in-Chief can't get his Socialist mitts on it.

April 10, 2013 at 1:55 pm

It seems oh so silly to try and gain an extra 1/2 to 2% on an account trying to play catch-up when you turn right around and spend more than you received to extend your debt... it makes no sense at all.

April 10, 2013 at 10:19 am

It behooves most people to simply pay down their debt instead of trying to edge out another 1% of return on investment from one place vs another.

Debt runs at MUCH higher rates than interest rates so unless you're free of all debt, getting a 1% here 2% there isn't going to help much.

Also, saving money and building wealth isn't simply math but it's highly psychological. (Otherwise, mathematicians will all be millionaires). Curb spending, pay off debt, pay off the house... much more useful in building wealth for ordinary people instead of going from one account to another for extra 0.5% in interest.

April 10, 2013 at 9:49 am

2% is such a great and wonderful rate... for the banks. They lend it to us for 18% to 24% and we lend it to them for less than 2%. I am so very tired of being a part of this scam.

I recently made one transaction too many from my savings account, and the penalty fee cost me more than the last 3 years interest on that account. In other words, if I had kept the money in a tin can under my bed, I would have more money today.

April 09, 2013 at 9:56 pm


That is great wouldnt hurt if you told us how and where..

uncle scam
April 09, 2013 at 11:22 am

I have all MY money in YOUR SAVINGS ACCOUNTS


April 08, 2013 at 4:41 pm

If one has to invest it has to be in BRIC nations..I myself an immigrant from BRIC have the option of sending money back to my country. I earn around 9% on a fixed deposit and that gets credited back to my US account once matured. Investing into US financial houses not a good idea at this point of time

April 08, 2013 at 1:10 pm

You can save your way to wealth, depending on what your definition of wealth is. Over the last 30 years of investing, I've earned a return equal to 10 times what I've invested. I cannot save that fast!

There are relatively safe ways to invest your money that will return 10, 20 even 30 times what a savings account or a CD will give you.

Alan Samuels
April 07, 2013 at 1:26 am

I have direct deposit of my paycheck into my checking account and then do something more meaningful than finding a better interest rate.

I get paid twice a month and have two high-interest money market accounts. 40% of my first check goes into one account and 40% of my second check goes into my second account, all with automatic withdrawals geared to occur, on average, about 3 days after the checks are deposited.

We get used to living on 60% of my paycheck.

More people save their way to wealth than invest their way to wealth.

April 06, 2013 at 8:06 pm

I'm getting 3.99% up to the first 25 k.