With a little work, you can park up to $15K at Lake Michigan Credit Union
for a 3% rate: https://lmcu.org
Here are the criteria to qualify for the 3% rate in an LMCU Max Checking account:
- Sign up for e-statements.
- Minimum of 4 logins to online banking per month.
- Minimum of 10 debit card purchases per month.
- Direct deposit in your account at least once per month.
I have my LMCU account linked to Mint.com, which handles the minimal required logins.
On the first Monday of each month, I reload my Amazon gift balance
with ten purchases of $0.50 each for a total of $5.00 to satisfy my debit
card requirement.
I also transfer $5 each month from my primary checking account into LMCU via
an automated ACH transfer which counts as a direct deposit.
The entire process takes less than 10 minutes each month after you've
got your account set up. LMCU has a nice link on your account page to
confirm you've met all the requirements to qualify for the 3% rate.
Your monthly $5.00 purchase amounts to the monthly interest you would earn on $2,000.00 at an APR of ~3%. So your first $2,000 will never earn any interest.
Additionally, if your emergency fund is not in a tax advantaged account (it shouldn't be), then it's even worse than that; e.g., you have to pay taxes on interest paid on the first $2,000, without being able to write-off the $5 spending each month.
Why not put it into a high income fund, like SPHIX, PONDX, or SAMH (just for instance), where you could earn north of 5%? It's not a fixed guaranteed rate, but it's paid monthly, and compounds faster.
Sure, its unit price fluctuates, but typically only by a penny or two, and it seems to go up more often than it goes down. It's certainly less work. Ten minutes a month isn't a lot of work, admittedly, but you're also giving up the interest you would earn on $2,000 every month, and paying taxes on it as if you had net-received it.
Real world example: I put $20K into SPHIX 14 months ago, and it's worth nearly $22K now ($21,941.18), with dividends reinvested; about an 8.26% APR equivalent (that includes a 2.86% appreciation in the unit value over 14 months). If the unit value had, instead, gone down by the same percent my compounded return would still be
"only" 5.6% APR.
That's after accounting for the $75.00 transaction fee Schwab charged (not all brokerages charge a fee on SPHIX). There is no fee for selling, after a 3 month holding period.