The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Angus_Mac on February 07, 2019, 10:08:11 AM
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For way too long I've just kept 6-month's (or more) worth of expenses in a USAA checking account, earning .01% interest. I have two questions: 1) How much should I keep in a checking account (e.g., to pay monthly bills from)? 2) Where else should I keep this money that would yield a better return? This money just needs to be liquid enough so I could access it for some sort of financial emergency.
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CapitalOne has a money market account ($10k minimum) that will yeild 2%. Discover has similar. The traditional capitalone savings account has a 1% rate.
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I keep very little money in my checking account and keep most of my money in the high interest savings accounts.
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Check out Ally Bank- they have a saving account with 2.2% and a lot of really good cd rates as well. I believe they have checking accounts that earn interest as well.
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I keep a month of expenses plus a small vacation reserve. Then I have an EF and separate savings brokerage I keep invested in SHY, which is a short term treasury fund yielding 2.7% last time I checked. I find the volatility acceptable in exchange for a yield that's slightly higher than HY savings or MM. In an emergency, it would take three days to sell and settle, so I would rely on my credit lines if I needed cash within three days.
I also think the 2.2% at Ally is a good choice. I've considered shifting some money there but never pulled the trigger.