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$12K in checking? You’re Lemon-ing

By Claes Bell · 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
Will
March 03, 2013 at 6:30 pm

One word: bitcoin.

Cameron
March 03, 2013 at 8:25 am

The $12k in my mattress is safer than most banks.

erin111
March 02, 2013 at 7:59 pm

It is legal for banks to pay close to nothing for saving accounts and charge up to 22% on credit cards. This is a legalized robbery!!!

peter
March 02, 2013 at 6:59 pm

If 2% is a high yield then 10+% on a credit card is what? Robbery? High yield accounts:) Funny...

Mike White
March 02, 2013 at 4:26 am

bankers will rip me off no matter what I do with my money,
the checking account is the least-punitive place for it.

joey bleu
March 01, 2013 at 9:13 pm

checking accounts are free money for banks. they can lend that out and pay us nothing. i have been doing business with the samn man for a 1/4 of a century. we have made and lost millions its a lot of fun. keeps me from getting bored. right now i am earning a blended rate of about 10% on funds in calomos and eaton vance . eaton vance only been in business 100 years.

Andy
March 01, 2013 at 4:59 pm

Please direct me toward this "high interest savings account" of which you write.

Harry A. Hole
March 01, 2013 at 2:07 pm

What's the difference in interest rates between a CD and a typical checking account? Why bother?

Edward
March 01, 2013 at 11:14 am

People aren't investing because, much like the mistrust of banks after the depression, no one trusts the investment markets to do the right thing with their investment, and in this society of income equality the risk has long reaching effects on a families survival.

ian
February 28, 2013 at 3:27 pm

Oh,and you can access up to 10% of funds, even during year 1, without a penalty.