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EARN INTEREST ON YOUR EMERGENCY FUND

  • Writer: Treavor Dodsworth CFP®, CPA, CKA®
    Treavor Dodsworth CFP®, CPA, CKA®
  • Apr 25
  • 1 min read

Don't just keep your emergency fund in your checking account or in a savings account that pays you 0.01%. There are plenty of safe options for an emergency fund that are near 4%.

You Have Options

The first are what are generally called online savings accounts. Generally speaking these accounts are FDIC insured (like most brick and mortar banks) but offer much higher interest rates. You can see a list of several online savings accounts here.


Another option are money market accounts. These also are typically in the 4% range. Confirm with your provider that it is FDIC insured if that is a concern.


It may seem inconsequential to utilize an account like this for your emergency fund but there are two primary reasons to do so:

  1. The interest does add up. If you have a $30,000 emergency fund and are earning 4%, that is around $100/mth just for using a different account.

  2. The second is the money is set apart. It is more obvious that you are dipping into your emergency fund if you have to login to this separate account and pull out funds.


While managing your cash may seem inconsequential, it is an ongoing benefit that you can do in about as much time as it took you to read this. Take some time today to review what you are earning on your cash deposits and if there are better alternatives.

 
 

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