Go to
Bankrate.com and click on the Checking & Savings tabs to start searching for the institution that’ll offer you the best return on your money.

Whatever you do, don’t keep your emergency fund in actual cash dollars.

I use ING Direct. They usually don’t offer the absolute best interest rate on their savings account, but their rates have been among the best since I signed up with them about 4 years ago. I’m reluctant to open accounts every time a new player appears on the scene since interest rates change often. The bank offering the highest interest rate this week may not offer the best rate next week.

When it comes to emergency funds, some people want their money where they can get their hands on it immediately. With ING, it takes about 3 business days to transfer money from your savings account to your checking account with your primary bank. This isn’t uncommon for banks that exist almost exclusively on-line.

In the case of a true emergency, you probably could call ING and have them wire the funds into your checking account immediately. I haven’t tried this technique. But, I do have an ING checking account that I rarely use. Recently, I switched my primary checking account from Washington Mutual (now Chase) to a High Yield Investor Checking account with Charles Schwab. I won’t get into all the details, but I didn’t have enough money in any of my four checking accounts to cover the full balance on my credit card bill.

I don’t believe in paying interest, so, to me, this was an emergency. I transferred the money from my ING savings account to my ING checking account. The transfer happened immediately since it was within the same bank, and then I paid off my credit card balance using my ING checking account. If I had to transfer money from ING to Schwab or any other financial institution, it’d take about 3 business days to clear.

You can also use a money market account (MMA) to store your emergency fund. MMAs usually grant you check writing privileges, but the interest rates tend to be lower, and there are more restrictions on the accounts like minimum balance requirements and monthly fees. Yuck!

Hope this helps!

I was helping a young lady with her budget last week and explained to her how important it was to have an emergency fund. So we started autodrafting money out of her check to a savings account. Hopefully more will do the same and understand its importance.