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Best Place for an Emergency Fund?

bankjamie
New Member

Best Place for an Emergency Fund?

With the changes to HMBradley's savings accounts, I was curious what else is out there.

 

  • Yotta - ~1.5% APY
  • Quontic -1.01% up to 150k (Mint) (10 debit card spends)
  • Axos - 1% up to 50k (Mint) (Direct Deposit, 10 debit card spends, other hoops)
  • OnJuno - 1.2% up to 50k (No Mint)
  • OneFinance - 1% up to 25k (Direct Deposit)
  • T-Mobile Money - 1% (No Mint)
Message 1 of 30
29 REPLIES 29
AMJ50
New Contributor

Re: Best Place for an Emergency Fund?

DCU 6.17% on the first $1000 saved

Message 2 of 30
beets18
Valued Member

Re: Best Place for an Emergency Fund?

Alternatively, you could look at Series I Bonds from the Treasury - the current rate is 7.12%.

 

Few downsides: money is locked up for 1 year, it has a 3 month interest penalty if redeemed before 5 years, and the TreasuryDirect website isn't the greatest.

 

Edit: also there's a $10k limit per person (so $20k if you have a spouse), but you can also get $5k in paper I bonds from a tax refund. That's usually enough to get a good portion, or all of, your emergency fund. Some people do just a half, third, or quarter of their EFund at a time due to the 1 year lockup.


Message 3 of 30
iced
Valued Contributor

Re: Best Place for an Emergency Fund?


@AMJ50 wrote:

DCU 6.17% on the first $1000 saved


While it's nice for that $1000, $1000 is also not nearly enough for an emergency fund, and the interest rate above $1000 is garbage. Their dividend checking account has a higher interest rate than their savings saves.

 

For the OP, if you're fine maintaining whatever requirements there are for interest rates for HYSAs, the list you have is probably fine, but I'm of the camp that emergency savings are really needing to be somewhere easily accessible with no catches, delays, penalties, or the like...even if that means interest is lower. Even with the HYSA, you're not really keeping up with inflation and the money isn't going to grow. But, it's not meant to either.

 

I'd recommend to avoid the 0.01% institutions for it, but otherwise find a bank you like with a 0.5% or so rate and park it there. You can take additional non-emergency funds and place those in places like DCU for the extra couple bucks a month if you like.

Message 4 of 30
Janus
Senior Contributor

Re: Best Place for an Emergency Fund?

Having an emergency fund that's locked up for 1-3 years really defeats the purpose IMO because you might need that Money for an emergency during tha time, especially if you're also facing penelties to access said funds. What good does earning high rate of retrun if it only winds up going to said fees?  While a typical HSA doesn't earn as much I feel it's the best place for such a fund for the intended purpose, and is certainly better rate of return than reg savings accounts. And it's obviously earning more than that cash under the mattress that i subscribe too but at least it's accessible in an emergency. lol  

 






Message 5 of 30
mppaul271
Regular Contributor

Re: Best Place for an Emergency Fund?

Consumers Credit Union..4.01APY upto 10k...but some hoops you need to jump through🙂

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Message 6 of 30
Anonymalous
Frequent Contributor

Re: Best Place for an Emergency Fund?

@beets18 beat me to the punch, but here's some more detail on a slightly different option:

Series I Savings Bonds

https://www.treasurydirect.gov/indiv/products/prod_ibonds_glance.htm

 

7.12% return, so higher than any saving or checking account. $10,000/person/year limit. Can't cash them in before 1 year, so there's a lag time before they become available. If you cash them in before 5 years, you pay a 3 month penalty.

 

The ideal plan would be to ladder in over a few years, by buying a few thousand worth, waiting a year, then buying some more. That way only a small portion are unavailable, at any moment in time. The 3 month penalty should be acceptable, since it's an emergency fund; you're not supposed to touch it. And they're designed to track inflation, so you shouldn't ever lose real value. The per person cap means they won't be enough for a full emergency fund, so you'll have to supplement them with other savings. It's slightly less liquid than a savings account, but in many cases that's a virtue. It makes it less likely you'll deplete your fund on things that can be planned for, like repairing a car every once in a while or replacing an old furnance, thus preserving those funds for real emergencies.

 

Message 7 of 30
Guyatthebeach
Valued Contributor

Re: Best Place for an Emergency Fund?

Bankjamie,

 

Take a look at Redstone FCU. They have a savings account with a 2.1%APR for the first $2500. Also if you will to leave money locked up in a CD, Navy Federal has a CD for 2.96%APR for the first $3000, and it's a year term that is renewable. The only stipulation is that you have direct deposit.  I opened to store emergency funds. Luckily I've never had to use the yet.


Guyatthebeach

Message 8 of 30
Revelate
Moderator Emeritus

Re: Best Place for an Emergency Fund?

Just throwing it out there but a lot of places you may be on a 3 day access period anyway (ACH times) if chasing a HYSA.

 

If you're doing that you can just put it in a brokerage account at a major institution as you can get a transaction settled in 3 days anyway generally.  I pool excess cash which doubles as my emergency fund and a truly opportunistic cash reserve in a .01% or whatever account at Chase because I can get it anywhere in the world at wire speed. 

 

Admittedly I'm not a low net worth individual anymore so I don't *need* this money to be making a large return, but do take into account how quickly you actually need the money because if it's a while, well, you have a lot of opportunities... but your definition of emergency may be different than mine.




        
Message 9 of 30
beets18
Valued Member

Re: Best Place for an Emergency Fund?

@Anonymalous I'm glad there's another I Bond advocate here. In my opinion, if the Federal Gov't has to limit the amount of money you can loan them, it's probably a good deal. Smiley Wink


Message 10 of 30
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