Dead money is cash that is not generating interest. Examples include money in a checking account, cash reserves at home, and funds for general spending. To change the situation, consider switching to an interest-bearing checking account and setting up an emergency fund in an interest-bearing account. Use a debit card instead of carrying cash.
Almost everyone has some sterile money in their possession. Essentially, dead money is any cash reserve that is not generating any type of interest income for the owner. There are several examples of money that does not earn interest in almost every home. Here are some examples of dead money and what you can do to change the situation.
The most common type of sterile money is in your checking account. Although several interest-bearing checking accounts are offered today, many people continue to maintain the same checking account they established years ago. In some cases, this is done because it is not necessary to maintain a minimum balance. For people who have enough income to accumulate a small nest egg in their household checking account, it’s a good idea to shop around and find a bank that offers an interest-bearing checking account. In many cases, the required minimum daily balance may not be as high as you think. Plus, you’ll earn a small amount on your balance each month.
Another example of household money that does not earn interest is found with cash reserves kept at home. Often this is the emergency fund that the household keeps on hand, making it necessary to run to the bank in case of some kind of unforeseen financial crisis. In the past, when banks were closed on weekends and there was no 24-hour ATM, this approach made a lot of sense. However, there is no real reason to keep a large amount of money in the house these days. Set up an interest-bearing account, put the cash reserves that used to reside under your mattress, and start earning a little interest while you wait for that emergency.
A final example of dead money has to do with funds that are kept for general spending. This type of barren money is usually found in a wallet or purse. Once again, the advent of the ATM has made this method somewhat unnecessary. Very few businesses these days do not accept debit cards for payment. This includes many fast food restaurants, most movie theaters, and almost all retail stores. In short, the chances of needing cash to make a purchase are pretty slim. Instead of keeping money in your wallet, put it in your account with interest at the bank and then use your debit card when necessary. Remember that there is almost always an ATM nearby if you need quick cash.
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