9 Smart Ways to Use the Extra Cash in Your Checking Account

Make the most of your spare cash in your checking account.
Updated April 1, 2023
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Realizing you’ve got more money than you need is a good problem to have, but it isn’t without its unique complications — like deciding what to do with it. 

Should you use your spare change to pay off your debt or save it for retirement? Is it okay to treat yourself with your spare funds, or should you let the money sit in your checking account until a rainy day comes along?

The right answer is ultimately up to you, but we have some suggestions that can help you get started on the right path. Read on to learn more about the 9 smartest money moves to make when you have spare cash lying around.

Move it to a savings account

fizkes/Adobe woman sitting on couch in front of laptop writing family budget on notebook

Even if you have an interest-generating checking account, it’s a good idea to move any extra over to your savings account instead. The money will almost certainly stay in your savings account longer than it would in your checking account, which means it has more time to create interest.

Plus, your savings account almost certainly has a better interest rate than your checking account does. Your dollar will end up going further in savings, which should make planning for retirement that much easier.

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Pay down credit card debt

nenetus/Adobe woman sitting at table using laptop while holding card to make online payments

Credit card debt is one of the hardest debts to get rid of, thanks in large part to credit cards’ absurdly high interest rates. 

The longer you go without paying off the principal sum, the more interest that sum generates, and the more money you’ll end up owing your credit card company. 

Any money you can put toward making more than the minimum payment reduces your interest charges and shortens the amount of time until you can get rid of the debt entirely.

Pay off your car loan

Freedomz/Adobe businessman shaking hand with salesman after purchasing new car with keys papers and pennies on table

Interest rates on car loans shouldn’t be anywhere near as high as credit card interest rates, so paying off car loans as quickly as possible isn’t necessarily as crucial as paying off credit card debt. 

However, since the Federal Reserve hiked interest rates last year in an attempt to combat inflation, anyone who bought a car in the last year or so might be staring down a much higher payment than they’re used to.

If you’ve been stressing about interest rates, putting spare change toward that higher amount might give you some peace of mind. It’ll also shorten the length of time it takes you to pay the loan off entirely, which means you’ll end up paying less in interest over time.

Pay down your mortgage

chinnarach/Adobe home loan receipt place on top of calendar

If you're making a monthly mortgage payment, consider making extra payments on the principal loan amount. While your mortgage payment amount won’t change, you’ll shorten the number of years that you’ll have to be making that payment. 

If interest rates are better now than when you bought your home (which is unlikely unless you bought the home in the last year or so), you could also consider using your extra money to pay any closing costs you incur if you decide to refinance.

Invest it

JJ Gouin/Adobe one hundred dollars

Since you don’t need to spend your extra money right now, you might as well put it someplace where it can create more wealth for you over time. If you’ve already put some of your money into your savings account, consider putting the rest into a solid investment. 

New to investing? U.S. Treasury bonds are typically considered safer and low-risk, which makes them a good first-time investment. You can also meet with a financial advisor to start building an investment portfolio from the ground up.

Tackle home maintenance projects

Angelov/Adobe male electrician standing on staircase to install stylish lamps on ceiling at new home

If you want to stave off a major home repair down the road, you should be performing frequent preventative home maintenance. 

However, even basic tasks like cleaning ducts or fixing leaky pipes cost money, and when you don’t have any spare funds lying around, it’s all too easy to delay small repairs until they’re major issues. 

Since you’ve got the extra cash, now might be the right time to start crossing some of your smaller home repair projects off your list.

Open a money market account

suriyapong/Adobe pennies stacked on table

A money market account is a type of bank account that combines aspects of checking accounts (such as check-writing capabilities) with aspects of savings accounts (such as higher interest rates). 

Typically, money market accounts have a required minimum deposit and monthly minimum balance. They also generate more interest than savings accounts, which makes them a good investment choice.

However, money market accounts are only intended to be used in the short term. If you’re planning a vacation or big purchase in the next six months, opening a money market account is one easy way to make your financial goals that much more achievable.

Start a college savings account

zimmytws/Adobe key with 529 label alongside graduation hat showing college savings plan

The cost of attending college has skyrocketed in recent decades, so it’s important to start planning for higher education as early as possible. 

If you have kids, nieces, nephews, or other future students in your life, a 529 college savings account can give them a head start at paying for school.

Additionally, opening a 529 account comes with tax benefits in more than half of all U.S. states. It’s worth talking to your accountant or doing some research to find out if your state is one of them.

Make a purchase you’ve been putting off

Coetzee/peopleimages.com/Adobe african american woman in store giving card for digital transaction using atm device

Have you desperately needed a new laptop for a long time now? Is your HVAC unit or water heater on its last legs? 

Your extra cash might be the boost you need to finally follow through on an important purchase you’ve put off in favor of tackling more crucial financial tasks first.

Bottom line

denis_vermenko/Adobe african american man standing in front of yellow wall flaunting money in surprise

Sure, you could leave your extra cash where it is, gathering dust in your checking account. Or, if it’s burning a hole in your pocket, you can always spend it. 

But you might as well put your good fortune to good use to help you build more wealth, and any of these tips should help you do exactly that.

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Author Details

Michelle Smith Michelle Smith has spent a decade writing for and about small businesses. She specializes in all things finance and has written for publications like G2 and SmallBizDaily. When she's not writing for work at her desk, you can usually find her writing for pleasure near large bodies of water.

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