Banking Blog

Finance Blogs » Banking Blog » $12K in checking? You’re Lemon-ing

$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

Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
March 07, 2013 at 6:44 pm

I would like to remind everyone that Liz Lemon is not a real person.

john Dough
March 07, 2013 at 4:41 pm

That's alot to have in your checking. I usually keep $2k in mine. That's enough to cover all my bills and living expenses every month. Anything else goes into my e*trade account and tax-deferred 401k.

March 07, 2013 at 4:21 pm

Lets not forget. Your 1099 INT at the end of the year will allow the Govt to reward you even further for saving. You must declare your "interest earned". So, against the @ 63.00 you might make in interest over the year keeping that $12-K in your bank, Up goes your taxes once again.

Logical? Hell no.

March 07, 2013 at 3:09 pm

Bob Denver- If you have any sales experience in the AG equipment field, specifically automation, give me a call. Always looking for salespeople.

March 07, 2013 at 1:43 pm

When it costs $120 to fill up the ol' truck and I'm spending $200-300 a week at BJs on lavish items such as chicken, baby formula and diapers, 12 grand in the checking account ain't all that much. Pretty soon I suspect I'll be wheelbarrowing that amount down to the local bakery for a loaf of bread.

Bob Denver
March 07, 2013 at 1:40 pm

$12k in the bank? That's the equivalent of a million dollars to me. Both unatainable. I bring home $2k/mo. $1400 of which pays for rent. that leaves $600/mo. to pay electricity/gas, internet, phone, car insurance, gas for the car and food for four people... There is $500 in the bank, with money against all of it ( more actually... but a negative ballance isn't uncommon).
$12,000 in checking (nevermind what people have in savings.) is just a rediculous number to many of millions of Americans in my same situation.
Meanwhile, our government has to come up with finantial cutbacks to our system but in turn promises tens of millions of dollars in aid to another foreign country's "rebels" (which brings our foreign aid bill well up over 1 billion dollars anually) Does this make sense to anybody else?

March 07, 2013 at 1:31 pm

My bank pays higher interest on my checking account - if I use their Visa card 12X/month and take my statement by email - than it does on my savings account. No brainer.

March 07, 2013 at 12:17 pm

Rates are just so low, why bother?

March 07, 2013 at 11:10 am

I think many are keeping a bigger emergency fund in case they get laid off.

March 07, 2013 at 1:03 am

I have about the same amount in a checking account. I no longer trust the financial system with my hard earned money. Also, as already mentioned, returns on investment are very low right now. Money kept in checking accounts has a higher reserve requirement so the bank can't lend out as much as if it were in my savings account.