Where Do You Keep Your Emergency Fund?

Posted on April 7, 2008
Filed Under Uncategorized |

I need to put the change from the change jar into a savings account and I have been pondering where it is best to put it. I really don’t want to put it into savings at the same bank where I have my checking account. It would be way too easy for me to do an immediate online transfer into checking. Yes, I know that I have no self control. I am left with the choices of another local bank or opening an account with Ing or SmartiPig.

I could put it all into my paypal account which is tied to a money market account but again, the temptation to spend it is way too much and it’s earning under 3% interest right now. Right now, Ing is earning 3% on savings. Smartipig is earning 4.30% but I believe that they will not allow you to withdraw money until your goal is reached unless you close the account. I will have to check to see what the local banks are paying but I suspect that it is the lowest of either of them. All in all, I think I am leaning toward Ing.

Where do you keep your emergency fund? Have you tried the Ing Orange account?

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Comments

10 Responses to “Where Do You Keep Your Emergency Fund?”

JoeTaxpayer (4 comments.) on April 7th, 2008 6:40 am

Do you currently save money in an IRA? If not, a Roth IRA, using a money market fund or CD is a great place for this money. If you don’t need it for the emergency, it will grow and become part of your long term retirement savings. But if you do need to take a withdrawal, a Roth permits penalty free withdrawal of all deposits. So this account can do double duty for you.
Joe
SingleGuyMoney (1 comments.) on April 7th, 2008 7:01 am

I currently keep mine at E-Trade Bank. They are currently paying just a hair over 3%. These low rates suck!!!
HisMoney (1 comments.) on April 7th, 2008 7:52 am

I recently wrote about this very thing in my blog. I’m using ING so that I get better rates than my bank and still have easy access, but NOT instant access like I would with my bank. You could use E-Trade, HSBC, or one of the other online banks as well.

SingleGuyMoney is right though, interest rates have kept dropping as the Fed cuts rates, so although the interest is better than nothing, it’s not as good as it has been in the past.
bouncing betty on April 7th, 2008 10:58 am

I have my E-fund at a seperate bank from my main checking account. I also do not carry that account information with me so I am less tempted to use it, but have access to it for an emergency.

I do have an ING account that I auto pay into each pay period. I like the ING account because I don’t have instant access to the money. I also set up an account at my local credit union (purely for the car loan refinance aspect) and declined the debit card feature.

The interest rates are not great in either account, but I have them at seperate instituions because it would be too easy and too tempting to log on to my main bank acccount and just transfer funds on a whim.

I rolled up my change this weekend and have to go to one of the banks this week to make a deposit, it’s only $25, but it’s something!
Jennifer (4 comments.) on April 7th, 2008 1:09 pm

I recently opened an account at ING for this. It earns more interest than my savings account, and stays fairly easily accessible without being TOO easy to access. I think it was a good choice– I definitely enjoy being able to easily open additional savings accounts online for different purposes. To do that in my brick and mortar credit union, I had to go in and wait in line to have someone do it for me. And even then, I accidentally transferred out all the money in that account (instead of leaving $5 in there like I intended) and it automatically closed on me. That doesn’t happen at ING.
Lindsay (17 comments.) on April 7th, 2008 3:32 pm

My emergency fund is at the same bank as my checking account, so I have the self control problem you mentioned. My longer-term savings accounts are not with the same bank, though.
CindyS on April 7th, 2008 8:44 pm

Wow, Great suggestions from everyone!

Joe Taxpayer, I am going to look into a Roth. That’s an excellent suggestion in the meantime, I think Ing will probably be my choice although I may check out E-Trade as well. I do like the flexibility that Ing offers. It’s nice to hear some of the pros and cons of both the online method and the bricks and mortar banks.
Denise on April 8th, 2008 8:58 am

Right now ours is just sitting in our checking account. We know the exact amount of it and simply don’t use any of it. That account gets a higher interest rate than anything else around here and is close to the online savings account rates. We’re considering putting it into an online savings account but so far we haven’t done that. Provident is the one we were going to go with but the customer service nightmare there is just too great. I won’t do business with them. I’d like it to earn decent interest but there isn’t decent interest anymore for that small of an amount and as Dave says, the money’s purpose isn’t to make more money but to provide safety. So for now it sits in our checking account until we come up with a better solution.
Rina (1 comments.) on April 8th, 2008 5:00 pm

I keep my emergency fund in my ING account - 3.65% annual interest!! And, I can’t access it as readily as an envelope in my house, or a regular bank account being that it takes at least 4 days to get transferred to my regular bank account.

I totally recommend ING - and I have referral links if anyone needs them!!
LJ (2 comments.) on April 9th, 2008 12:35 am

We keep ours in a local credit union, but also have a money market at another local bank. I have found that the smaller local local banks and credit unions have better rates and are much nicer to deal with.

I have heard great things about ING though, so I may through some money at it. I like to spread it around-never want all my eggs in one basket
Take Care

LJ