Author Topic: High Yield Savings for Emergency Fund  (Read 958 times)

Weisass

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High Yield Savings for Emergency Fund
« on: November 15, 2022, 06:38:33 AM »
Hi all!

I have been hesitating on moving our emergency fund into a high yield savings account, mostly because it is a new thing to me. If anyone has experience doing this, or advice on what to look for right now, I would be very interested. or if you have a different suggestion for an emergency fund, and where to put it, that would be something I would be open to hearing about.

NotJen

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Re: High Yield Savings for Emergency Fund
« Reply #1 on: November 15, 2022, 06:50:27 AM »
I've had money in various online-only high-yield accounts for almost 20 years.  I've never had a problem.

I like Doctor of Credit for learning about different banks: https://www.doctorofcredit.com/bank-accounts/

You can also look into I-Bonds if your EF is larger/covers more than a year (since your money is locked up for a year).

lucenzo11

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Re: High Yield Savings for Emergency Fund
« Reply #2 on: November 15, 2022, 08:43:44 AM »
Where do you currently have your EF? And what is your hesitation with a high-yield savings? Do you not know/trust the bank?

I've used high-yield savings accounts since I was in college. Here are some things to look for:
-FDIC Insured
-Look for fees. You should not be paying a monthly fee. There may be fees on excessive withdrawals, standard is 6 free withdrawals per month. This is standard as it was tied to a federal regulation (that is now gone), but many banks still have this fee and as this is your EF, it really should never come into play.
-Look for any fine text that lists the rate as being introductory. All interest rates are subject to change at any time, but don't get fooled by a bank that says they'll give you 4% for your first three months. It's best if their rate is the standard rate for all customers because it means it's less likely to be quickly reduced after they lure in new customers.
-Probably worth a quick google search to make sure they aren't in the news for anything stupid. Also good to check to see how their customer service is, in the rare occasion that you actually need to use it.

If you are hesitant of why these banks are offering higher interest rates then your local bank, two of the main reasons are that they are trying to attract more money to their bank so that they can in turn lend out more money (for their profit and partially yours), and that they are (most likely) an online bank and don't have all the costs of a standard branch network.

sonofsven

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Re: High Yield Savings for Emergency Fund
« Reply #3 on: November 15, 2022, 08:53:30 AM »
I have my $25k e fund spread throughout multiple online bank accounts and standard checking/savings accounts chasing bank bonuses.
I believe most of the high yield savings accounts are around 3% currently. Some are higher but require direct deposits to maintain the higher rate or are limited to only apply to smaller amounts.
I also recommend Doctor of Credit as a resource to see an unbiased list of high yield savings accounts.

darkskys

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Re: High Yield Savings for Emergency Fund
« Reply #4 on: November 17, 2022, 05:29:49 AM »
I just opened a HYSA at capital one. 3.0% rate. So long as they are FDIC ensured your money is safe.

The app is easy to use which is really important for a (mostly) online bank.
Thereís plenty of other good ones out there. Check out NerdWallet, thereís nice reviews and breakdowns there.

remizidae

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Re: High Yield Savings for Emergency Fund
« Reply #5 on: November 20, 2022, 07:22:45 AM »
I just got a $450 bonus for putting money in Discover savings. Itís 3% interest.

iluvzbeach

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Re: High Yield Savings for Emergency Fund
« Reply #6 on: November 20, 2022, 07:56:19 AM »
Iíve used several in the past. Capital One is great, so is American Express. There are several other great ones out there. I would stay away from Citibank online as I found them very difficult to work with - easy to deposit the funds, not so easy to get the funds back out.

Michael in ABQ

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Re: High Yield Savings for Emergency Fund
« Reply #7 on: November 20, 2022, 08:51:32 AM »
I've been using Live Oak Bank for several year. Maybe not the absolute highest rate - but they did adjust rated upward pretty quickly when rates started rising. Of course, they also dropped them when interest rates were down to almost nothing a couple of years ago. Their current rate is 2.75%.

BC_Goldman

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Re: High Yield Savings for Emergency Fund
« Reply #8 on: November 20, 2022, 09:25:27 AM »
I just opened a HYSA at capital one. 3.0% rate. So long as they are FDIC ensured your money is safe.

The app is easy to use which is really important for a (mostly) online bank.
Thereís plenty of other good ones out there. Check out NerdWallet, thereís nice reviews and breakdowns there.

Thanks for this!

I've had CapOne since back when it was ING. I didn't think I was making that rate so I checked and just opened the 360 Performance Savings. 3% vs 0.3% is a nice jump! It looks like my old savings account was still under the old savings and had a much lower rate.

Weisass

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Re: High Yield Savings for Emergency Fund
« Reply #9 on: November 20, 2022, 06:54:39 PM »
Thanks everyone! Itís really just the fact that itís not something I have done previously, and it feels dumb not to.  I keep my ef in our usaa bank account, which is effectively an online bank since there is no local branch. Thanks for the recommendations. Iím going to look into I bonds or recs on the site suggested.

GilesMM

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Re: High Yield Savings for Emergency Fund
« Reply #10 on: November 20, 2022, 07:16:57 PM »
Are you sure you need an emergency fund? Are you living hand to mouth?  We have plenty of credit cards for an "emergency" or we can sell/shift some investments in a true "emergency".  I sort think of emergency funds as for people who are so bad with money that 3-6 months out of work would have them living on the street.

Car Jack

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Re: High Yield Savings for Emergency Fund
« Reply #11 on: November 21, 2022, 08:13:36 AM »
If you're not comfortable, maybe open a HYSA and put only a little money in.  Ally sometimes offers bonuses to open an account there.  I used to be the most conservative investor known to man.  I wouldn't invest in the market (besides my 201k that invested in random funds).  It's partly why I have over $400k in US Savings Bonds.  I use 2 HYSAs now.  Ally because it's pretty well known and has reasonable rates and Redneck Bank because their rates tend to beat Ally but they have a limit on the amount they'll pay the big interest on and if you go beyond it, the extra earns like 0.5% or something trivial.

 

Wow, a phone plan for fifteen bucks!