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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
robin
April 16, 2013 at 5:16 pm

@JDinHuntsvilleAL - you're better off, Regions is terrible.

Nathan
April 16, 2013 at 3:20 pm

>> 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.

Why don't banks just automatically pay interest to customers who meet those criteria? "Hey, we noticed you're a good customer for us, so we want to reward you." Why make us explicitly open a different kind of account (and probably, shuffle money between them)?

Gremlin
April 16, 2013 at 12:47 pm

tomm445 "The economy used to be fueled by debt.'

Our money IS debt. If all the debts were paid off there would be no money. We need to get rid of the Federal Reserve and stop paying interest on money created at an instant debt. FR is NOT Federal and there definitely are no 'Reserves!' Read page 6 of Modern Money Mechanics written by the Federal Reserve and they will tell you how they make their money. Out of thin air. But we have to pay them interest when they only lent us paper!

EarlGrayHot
April 16, 2013 at 7:55 am

If you keep your money in a savings account in the same bank it should be readily available-no waiting needed.

sam a
April 16, 2013 at 12:19 am

i keep a fair amount in checking. and no, Cleas, it's not going into a savings account. this is on bankrate? the checking account is a demand account and i can get my money NOW if needed. savings accounts can limit your availability to cash, in withdrawal restrictions on frequency or upon direction by gov, delay availability for a period of time. see reg D nice way to keep a bank run in check. and savings vs. demand impact banks reserve requirements.

JDinHuntsvilleAL
April 15, 2013 at 11:12 am

When Regions first came to town I looked into switching my accounts to them. The problem was, in order to get "free" checking I had to keep a MINIMUM BALANCE OF $10,000 in the CHECKING account. So Liz Lemon isn't really that much higher now, is she?

Bear
April 15, 2013 at 7:53 am

At my bank (PNC) growth checking pays every bit as much in interest as 12 month CD. The difference with money market is negligible. Why tie my money up when it pays to keep it in checking?

As for putting my 'savings into a balanced portfolio of stocks and bonds designed to grow wealth over the long term'... well I tried that before. I even paid for a financial adviser to help me make wise choices... and I lost a huge chunk of my hard earned cash. So to the Wall Street Knob who thinks that is a great idea, I say keep your hands in your own pockets!

BPG
April 14, 2013 at 2:03 am

CDs pay almost nothing. May as well keep it in checking. The interest I'm forgoing isn't worth my time to move the money to an online account. And its not worth locking it up for any duration.

nunya
April 13, 2013 at 12:20 am

tomm445 hit the nail on the head. Cash is gone, and were switching to a electronic cash only society, NO MORE CREDIT CARDS.. Just say NO to Credit Cards. If your using CC's "where is your sign?"

tomm445
April 10, 2013 at 7:10 pm

the economy used to be fueled by debt. It's going to take a while til our consumer oriented capitalists realize the party's definitely over.