Until a few years ago, banks paid such low interest rates on savings deposits that it was hardly worth the trouble of investing excess money in the short term. All of a sudden, though, financial institutions are starting to offer two or three percent interest – or even five percent on securities. It's almost a crime to leave a buffer of $5,000 in your checking account. After all, if you invested that money, it would earn you enough interest to permanently fund a Netflix and Spotify subscription.

The challenge here is to keep your checking account balance from ever slipping into the red; otherwise the bank will charge exorbitant interest on the "debt" or simply bounce debit transactions. The trick is to be able to estimate how long the current balance will be sufficient to cover future debits. In the meantime, your salary will be deposited into your account on a regular basis (hopefully). Debits are often scheduled for fixed days of the month. For example, rent is usually debited at the end of the month. Credit cards (i.e., genuine charge cards, not debit cards) are billed by the card issuer on a specific day every month.

Given that certain deposits and debits occur at fixed times each month, it would be wasteful to ensure that all expenses are covered way ahead of time. True interest hunters (Figure 1) simply ensure that the desired amount of money is in the account at the time of the debit. Money that is buffered by credit cards in the meantime must be covered later. Figure 2 shows that the curve always stays above zero, even with ups and downs due to credits and debits.

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