2.1.22
Where to Keep Your Emergency Fund
Three things to consider when setting up an account for unexpected expenses.
You already know that it’s a smart to have an emergency fund for unexpected situations such as home repairs, medical bills or an interrupted paycheck. But do you know the best places to put your savings?
When saving money for emergencies, it’s best to make use accounts that are:
- Low risk
- Easily accessible
- Have low or no fees
Let’s explore each of these factors more closely.
Low-risk places for emergency savings
The stock market, with its frequent ups and downs, it not the place for emergency funds because of the risk; the odds are low that a financial emergency would occur while stocks are high.
There are also several of reasons why stashing your entire emergency fund at home isn’t a wise move, either. First, you miss out on earning interest which can help protect your savings from the effects of inflation. Secondly, money stashed at home isn’t insured. A single incident of fire or theft could wipe out your savings.
Low-risk places to stash emergency funds include:
Savings accounts can be opened with lowest minimums.
Money market accounts at Consumers can be opened with as little as $1,000 and accrue more interest than savings accounts.
CDs will offer higher interest rates than money market accounts, but require more planning because they limit access until they reach maturity unless you pay a penalty. You can “ladder” several CDs so portions of your emergency fund are freed up at regular intervals, which is done by setting up several CDs and staggering the maturity dates.
Additionally, when you deposit your funds at a credit union or bank, each account is federally insured up to $250,000, providing valuable protection for your money.
Keeping funds easily accessible
When you need access to emergency funds, there’s typically a degree of urgency involved. That’s why it’s important to consider how fast you can transfer funds to your checking account for easy access.
Online-only bank accounts may slow down access to your money. In some cases, transfers can take up to two days or more. When you keep your emergency fund at the same place where you do your primary banking, transfers between accounts can often be made instantly.
Avoid fees
You don’t need unnecessary fees eating away at your emergency savings. Look for accounts with no or low fees. With a Consumers savings account there are no monthly fees when you enroll in eStatements.
Talk to us today about your options for setting up an emergency fund account at Consumers.
Consumers provides banking services for more than 120,000 members. If you have banking questions, call us at 800-991-2221. We make it easy to bank how you want, when you want.
Federally insured by NCUA
