Where we keep our money

J and I have all of our bank accounts with one big name bank.   We have a checking account, a home equity line of credit (the second mortgage we needed in order to qualify for the loan on our house), a credit card, a business checking account, and a business savings account.   I’m not particularly wowed by the bank’s service, but I love the convenience of having everything on one website.   I check our accounts daily, and when I log on, I can see all five accounts  on the same page.   Paying the credit card bill is just a matter of clicking the money transfer button.  

Our home equity line of credit  has an APR of  8.53% right now.   Ouch.   It was 4.25% when we bought the house four years ago.   But it’s a pretty small  principal compared with the main mortgage, so it doesn’t make that much of a dent in the monthly finances.   And we’ve been using it as a place to stash our money ever since we bought the house.   Every time we get paid into our checking account, I leave enough money to cover whatever bills we pay from the checking account, and then transfer the rest to the HELOC right away.   It sits there all month, and I pay the credit card bill and the mortgage (our two big bills) directly from the HELOC (we can write three free checks from the HELOC per month, and the credit card bill doesn’t count, since it’s just an on-line transfer).   Since we’re finally about to be rid of all of our high-interest, non-mortgage debt, the extra money that we’ve been paying towards debt will now just stay in the HELOC and start lowering our principal.  

So I take a glass-is-half full approach, and see this as earning 8.53% on our money, since that’s where we keep our money until it’s needed to pay bills.   And it’s pretty much a risk-free, guaranteed 8.53%, since I don’t see them lowering the rate anytime soon.   We’ll continue to put money into our IRAs every month, and $100/month into an ING account just because we like seeing the balance grow.   But without a bunch of debt payments, the rest of our money will be parked in our HELOC, safely earning 8.53%.    It sure beats leaving our money in the checking account,  earning a big fat zero percent interest, and paying extra interest on the higher principal for the HELOC.