When it comes to managing your money, one of the most common mistakes people make is leaving their cash sitting in a checking account. While it’s important to have some money readily available for daily expenses and emergencies, keeping all your money in a checking account could mean you’re missing out on opportunities to grow your wealth. Here’s why:
1. Low Interest Rates
Checking accounts typically offer very low interest rates compared to other financial products. This means the money you keep in your checking account isn’t working for you. It’s simply sitting there, not earning much interest.
2. Missed Opportunities for Growth
By keeping your money in a checking account, you’re missing out on the potential growth that could be achieved through other financial products such as high-yield savings accounts, certificates of deposit (CDs), or investment accounts.
Inflation reduces the purchasing power of your money over time. If the interest rate on your checking account is lower than the rate of inflation, you’re effectively losing money.
How to Maximize Your Cash on Hand
1. Take Advantage of Bank Offers
Banks often provide promotional offers to attract new customers, such as cash bonuses for opening a new account. For example, as of July 2023, Chase Bank is offering a $225 bonus for new customers who set up direct deposit. HSBC Bank is offering a $450 bonus for new customers who deposit $5,000 and maintain that balance for 90 days.
2. Use High-Yield Savings Accounts or CDs
High-yield savings accounts and CDs offer higher interest rates than traditional checking accounts. For instance, Ally Bank offers a 6-month CD with a 0.60% APY, and Marcus by Goldman Sachs offers a 6-month CD with a 0.55% APY.
3. Keep a Budget
Keeping a budget can help you determine how much money you need for your daily expenses and how much you can put into savings or investments.
4. Regularly Review Your Finances
Regularly review your finances to ensure you’re maximizing your returns. This includes checking for new bank offers, reviewing the interest rates on your accounts, and adjusting your budget as necessary.
Remember, the goal is to make your money work for you. By taking advantage of bank offers, using high-yield savings accounts or CDs, and regularly reviewing your finances, you can maximize the return on your cash and grow your wealth over time.
Top highest paying interest offers for checking accounts and 6-month CDs as of July 2023:
|Chase Bank||Checking||$225 bonus||New Chase customers only, $500 direct deposit||N/A||Link|
|HSBC Bank||Checking||$450 bonus||Deposit $5,000 in new money, maintain that balance for 90 days||N/A||Link|
|TD Bank||Checking||$300 bonus||$2,500 in direct deposits within 60 days||N/A||Link|
|Huntington Bank||Checking||$200 bonus||Open a new account, make cumulative new money deposits of at least $1,000 within 60 days||N/A||Link|
|Citibank||Checking||$700 bonus||Deposit $50,000 in new-to-Citibank funds within 30 days||N/A||Link|
|Ally Bank||6-month CD||0.60% APY||$0 minimum deposit||0.60%||Link|
|Marcus by Goldman Sachs||6-month CD||0.55% APY||$500 minimum deposit||0.55%||Link|
|Synchrony Bank||6-month CD||0.50% APY||$2,000 minimum deposit||0.50%||Link|
|Barclays||6-month CD||0.45% APY||$0 minimum deposit||0.45%||Link|
|Discover Bank||6-month CD||0.40% APY||$2,500 minimum deposit||0.40%||Link|