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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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regina morris
March 13, 2013 at 11:23 pm

I have less than $35 in my checking acct. No, no other accounts either. I am an uber-Lemon!!!!

March 13, 2013 at 8:35 pm

RICK I FEEL YOU!!!! I am doing EXACTLY the same the EXACTLY the same reasons. Peace

March 13, 2013 at 5:27 pm

since the interest paid on savings accounts is so utterly meager, what difference does it really make?

Even at 2 per cent, which is higher than most, if you have $12K in your checking account, you are "losing" a whopping $240/year which is about enough to take the family to dinner in a nice restaurant for Christmas. Real interest rates for checking are usually 1 per cent or even lower unless you have a LOT of $$ in the account.

March 13, 2013 at 4:21 pm

I agree with DJ about owning physical precious metal, but for the time being when I go to the grocery store or pay the electric bill I am not plunking down silver rounds, so yes I'm keeping a hedge against unemployment in checking.

March 13, 2013 at 4:18 pm

The economy and job market have me acting like a Depression era old lady. I keep a full year's worth of expenses between checking and savings. Mike is saying six months, but if you lose your job you don't want to be stuck taking a 50% pay cut because you couldn't wait longer, and it's a lot harder to find a job in 3-6 months than it used to be.

March 12, 2013 at 10:20 pm

What ever happened to the need for an emergency fund? Everyone should have at least a couple months and everyone really should have six months in an emergency fund. Americans are just getting closer to being financially stable than at any time in memory.

March 12, 2013 at 9:32 pm

Is there a rule for " the maximum you should keep in a checking account" ?

March 12, 2013 at 1:39 pm

High-yield checking accounts, like reward cards, are sleazy ways to stick it to retailers.

Banks and credit unions that offer high-yield checking accounts expect you to swipe your debit card at least 10-15 times a month, and use the 'credit' option with the card, so the bank can earn an outrageous swipe fee.

These accounts also limit how much money you can put into the account to limit your interest cost.
March 12, 2013 at 12:51 pm

2% on a checking account? Where are you finding that?

March 11, 2013 at 8:06 pm

Interesting stats. I currently have about $16.5k sitting in my everyday checking/debit card account that has grown over the last year after a bonus and other unexpected revenue - a rarity these days to be sure. I thought about moving $15k of it into an IRA account to supplement my 401k, but I like the comfort of having instant cash with no headaches for emergencies (I also keep an undisclosed amount of cash somewhere accessible 7x24 should I need it).

Further, as can be seen in the charts here for interest bearing checking accounts, most don't even pay 1% APR, which is a complete insult. Finally, the way this nation is headed at the current rate of out of control debt spending and Bernanke pumping Monopoly money into the economy, I sleep better at night knowing that I have that much cash just a transaction away if all hell breaks loose.