4 Smartest Places to Keep Your Emergency Fund

Have you managed to put money away for a rainy day, but it's still sitting in your checking account or a traditional savings account, earning very little interest? If so, it's time to find a new home for your fund, someplace where your money can earn money. Here are four of the easiest, smartest places to tuck your emergency fund away.

1. High-yield savings account

High-yield savings accounts typically pay much higher rates than traditional savings accounts, helping your money grow. Here are several more facts you need to know about high-yield savings accounts:

• Some high-yield savings accounts pay a much higher annual percentage yield (APY) of 5.00% or more.
• Funds in a high-yield savings account are easy to withdraw when you need them (often, you'll need to transfer money to a linked checking account.
• It pays to monitor APYs closely, as rates are variable and can change.

2. Money market account

A money market account (MMA) is a type of savings account (with a somewhat fancy name). MMAs share some characteristics with high-yield savings accounts, although there are also notable differences.

• Some banks and credit unions currently offer great rates on MMAs, far higher than a traditional savings account.
• MMAs often have a minimum balance requirement to open an account.
• You can often access your money via checks or a debit card.
• The number of withdrawals and transfers you make in one month may be limited.
• Like high-yield savings accounts, MMAs have a variable APY, meaning you must remain aware of interest rate changes.

3. Certificates of deposit

A certificate of deposit (CD) is yet another type of savings vehicle offering high APYs on your savings. Here's how a CD works:

Our Picks for the Best High-Yield Savings Accounts of 2024

Product	APY	Min. to Earn
American Express® High Yield Savings Member FDIC. APY 3.80% Rate info 3.80% annual percentage yield as of January 10, 2025. Terms apply. Min. to earn $0 Open Account for American Express® High Yield Savings On American Express's Secure Website. Member FDIC.	3.80% Rate info 3.80% annual percentage yield as of January 10, 2025. Terms apply.	$0	Open Account for American Express® High Yield Savings On American Express's Secure Website.
Capital One 360 Performance Savings Member FDIC. APY 3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening. Min. to earn $0 Open Account for Capital One 360 Performance Savings On Capital One's Secure Website. Member FDIC.	3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening.	$0	Open Account for Capital One 360 Performance Savings On Capital One's Secure Website.
Western Alliance Bank High-Yield Savings Premier Member FDIC. APY 4.40% Rate info The annual percentage yield (APY) is accurate as of Jan. 2, 2025, and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY. Min. to earn $500 to open, $0.01 for max APY Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website. Member FDIC.	4.40% Rate info The annual percentage yield (APY) is accurate as of Jan. 2, 2025, and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.	$500 to open, $0.01 for max APY	Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website.

• Opening a CD involves depositing a certain amount of money for a specific amount of time. The terms typically range from three months to five years, depending on the financial institution.
• In return for depositing money with it, the financial institution guarantees it will pay you a set amount of interest as long as you leave your funds in the CD for the agreed-upon term.
• One thing that sets a CD apart from deposit accounts like savings is that you're guaranteed a fixed rate of interest for the entire term. So, if you open a 5-year CD, you know exactly how much money you will earn by the time it matures.
• If you decide to withdraw money before the term ends, you're likely to get hit with a penalty. If you'd prefer, you can open several CDs, each with a different maturity date, so you can continually access some cash (this is called CD laddering). If a CD matures and you don't need the money to cover an emergency, you can always check current APYs and allow it to roll over into a new CD if you like the rates.

4. Cash management account

Another place you can safely park your emergency savings is in a nonbank cash management account. If you have a brokerage account, ask your broker about how much its cash account currently pays in interest. Like a traditional savings account, you can withdraw cash as you need it.

Ask yourself these questions to decide

There are three questions you'll want to ask yourself before moving your emergency fund into any of these accounts:

1. What is the current APY?
2. Is the rate fixed or variable, and does it matter at this moment?
3. Will I be hit with a penalty if I need to access my cash sooner than expected?

You know you've found the "sweet spot" for your emergency fund if your money is somewhere secure, has a good rate of return, and you're comfortable with the rules regarding withdrawal.