How to Pick a Savings Account for Your Emergency Fund
KEY POINTS
- A six-month emergency fund can generate significant income at today's interest rates.
- In addition to interest rates, you need to consider the various ways you can access your money.
- The best savings account for your emergency fund might not be the one with the highest interest rate.
An emergency fund can provide peace of mind that comes with knowing you'll be OK if something unforeseen arises, but it can also generate significant interest income. Experts generally suggest that you should keep six months' worth of expenses in a readily accessible place. And an interest rate of 4% or more applied to this money can put hundreds of dollars of extra money in your pockets each year.
However, that doesn't mean you should simply find the highest-paying savings account and put your emergency savings there. In addition to looking at interest rates, you need to consider other crucial factors before deciding where to keep your emergency fund.
Are you looking to maximize your emergency fund? Click here for our list of the top high-yield savings accounts right now.
Choosing the best savings account for you
There are several factors to consider when deciding on the right savings account for your emergency fund. Some are obvious, some are not:
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 December 28, 2024. Terms apply.
Min. to earn
$0
Open Account for American Express® High Yield Savings
On American Express's Secure Website. |
3.80%
Rate info
3.80% annual percentage yield as of December 28, 2024. 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. |
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
4.46%
Rate info
The annual percentage yield (APY) is accurate as of November 7, 2024 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. |
4.46%
Rate info
The annual percentage yield (APY) is accurate as of November 7, 2024 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. |
Annual percentage yield (APY)
All things being equal, a higher interest rate is better than a lower one. Even after the Fed's rate cuts in 2024, it's still possible to find a high-yield savings account from a reputable bank that offers an APY of 4% or more. Keep in mind that savings interest rates are variable and can change without notice.
Fees
Online savings accounts don't generally have monthly maintenance fees. But it's still important to take a look at things like wire transfer fees and any other costs.
Convenience
This is a big one to keep in mind, especially when it comes to emergency funds. One of the central ideas of keeping money in an emergency fund is that it will be easily accessible when you need it. Some of the top savings accounts have great APYs but limited ways to get money in or out of the account. Others offer things like linked debit cards, app-based money transfers, and more. Some banks are online-focused but do have some physical branches.
Technology
A good banking app can make managing and monitoring your emergency fund easier. It can make depositing and transferring money a breeze, and many banks even have app-based customer service available. On the other hand, a clunky app or website can add to your stress if an emergency arises.
It's also worth noting that money market accounts could be worth a closer look. Some of the top money market accounts offer APYs on par with the top high-yield savings accounts. However, many have extra convenience benefits such as check-writing privileges that could come in handy if you need to quickly cover an unexpected expense.
The bottom line
There's no high-yield savings account (at least not on our top accounts list) that would necessarily be a bad place for an emergency fund. But the right account can offer a combination of a high interest rate, convenience, and a user-friendly banking interface.
Our Research Expert
Matt is a Certified Financial Planner™ and investment advisor based in Columbia, South Carolina, and has been writing about personal finance since 2011.
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