Losing out on interest because there is too much in checking now

Hi there,

I think I need to ask a new question because I can't find specifically what I'm looking for.  Maybe you can help?

I realize this is a good problem to have, but I think we have too much money in our checking account right now.  Because of this, I feel like we're missing out on potential interest and therefore also losing money because of inflation.  Our checking and savings account's dividend yield is 0.05%!

Right now we have over $22,000 in checking because we are saving up for big items like a car, vacation, kids camps, a computer, upcoming medical bills, etc.

Because of credit card spending, our budget number is at over $18,000.  Anyway...  That's to try to give you a picture of what's going on.

So, because most of these things that we're saving up for will take several years before we spend towards them, it doesn't seem to make sense to keep going with this trend of keeping tens of thousands of dollars in checking and losing it to inflation over the many months it's going to take us before we actually spend it.  We could right now easily move about $10,000 to somewhere where it would gain better interest and still be a month ahead per YNABs rules.

The issue I'm having with that though is, then I'd have to deplete all the savings categories in our budget and keep track of it on paper or something and get all confused about what we have in each big savings items' categories, like the vacation and a new car, computer, etc.

I was thinking of keeping most of this $10,000 in our Vanguard account in the Settlement fund, which I think pays interest, if I understand that fund correctly.  Maybe I'm wrong about that though.  Either way, it seems weird and a little silly to keep this much money in our checking account.  I understood it when we were working towards getting one month ahead, but now it just seems excessive.

Thanks for reading my very long post.


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  • This is all very easily handled in YNAB. A lot of us are already doing what you are wanting to do. I have Vanguard too but I'd recommend an online high yield savings account like Barclays (1.3%) or Ally (1.25%). They are currently paying a better rate than you would get in Vanguard's settlement fund.

    Read this to understand the relationship between accounts and categories in YNAB:


    Put your savings account in your budget and transfer the $10,000 to your savings account. This will have no affect on your current categories as your budget consists of all the funds from all of your budget accounts. The only difference is that you'll be making more interest on this long-term savings.

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  • Here's another tip. Use scheduled recurring transactions and the running balance feature to make sure you have enough funds in your checking account to cover your upcoming bills. Schedule your income as well. I can look at my checking account running balance and see my future balance for the coming 30 days. I always make sure I have at least a couple thousand dollars buffer in my checking account at all times for my upcoming bills. Remember, not only do you have upcoming bills but you have upcoming paychecks that replenish the checking account. I rarely have to transfer funds to checking unless I have a big future payment coming up. I'm mostly transferring from checking to savings.

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  • Thank you so much Superbone !

    I see exactly what you mean (and I even read the whole article you referenced :-)  )  I will have to think about opening yet another account.  I wonder if there is any sense in buying a bond ETF or something as another option?  I'm just really hesitant, for some reason, to open another account.  But I totally get what you are saying.  Thanks!

    Now what I don't fully understand is the recurring transactions and the running balance feature.  Are you referring to the Working Balance total when I click on All Accounts or my Checking account?  And what would the scheduled recurring transactions be?  Right now I have every account automatically connected so I don't have to schedule any transactions.  And would the working balance (if that's the running balance) always want to be, say 30 days of expenses?  Thanks.

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      • Superbone
      • YNAB convert since 2008
      • Superbone
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      Maroon Cornet (c363ce3e3c0b) Yeah, not sure why you're reluctant to open accounts. My goal is to maximize my savings so I do what I need to make that happen. I have both Barclays and Ally savings accounts.

      As far as a bond ETF is concerned, that's up to you and your risk tolerance although bond funds aren't very tax efficient so I keep them in retirement accounts. I keep a certain amount of my savings in cash in these high yield savings accounts and after I got to a certain point, I started investing in a total stock market index fund with greater amounts. Some savings are long term so I don't mind a portion being in stocks.

      No, I'm not referring to my Working Balance. Do you have Running Balance turned on in your checking account? I'm referring to future balances as shown for the next 30 days or more. I'm making sure my future running balance stays at $2000 or more. Direct import is only meant as a backup and to keep things in check. If you're not scheduling transactions then you're missing out on this feature I'm describing. I want to know what my future balances will be and I can't do that without scheduled transactions. They consist of upcoming paychecks and bills such as my credit card bills and mortgage payment. This allows me to maximize my interest as you were looking to do in the title question.

  • Maroon Cornet (c363ce3e3c0b) said:
    Right now I have every account automatically connected so I don't have to schedule any transactions.

    Doing so prevents an easy way to estimate your future balance. 

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