Monday, October 13, 2008

Should I transfer my emergency fund to a new bank?

I recently looked at the interest rate on the money market account that I use as an emergency fund and was surprised that it was only 2.0%. As I should have to roughly $5000.00 in this account by December and $10,000 by June I would like a better rate on my money, thus I am considering switching to a different bank. I know my main objective for this account is not getting the highest interest rate, but rather having liquidity in case of an emergency. I know there are banks out there that do have higher interest rates, so dear readers, what banks do you recommend for emergency funds/money market accounts?

until next time, think prosperous thoughts



Dreamer said...

We are currently earning just under 3% on our emergency fund. We keep it in a money market online savings account with Capital One.

One thing I'm considering doing is setting up a CD ladder where each month you put 1/12 of your emergency fund into a 12 month cd. I think these will earn us a higher interest rate on average over the life of the cds. As they expire I can either use them or roll them over into another cd.

The Monogamoney Duo said...

Definitely transfer the money. I have half our savings in an Etrade savings account and half in an HSBC online savings account. That way if one of the banks cuts the rate, we still get a higher rate at the other bank. Both are over 3%.

Fabulous Financials said...

Here's a comprehensive list of banks with the most competitive rates: