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Where to Put Your Emergency Fund . . . Specifically

by Shawanda Greene

Last week we discussed the importance of not only having an emergency fund, but also keeping it easily accessible.  Although we kicked around the idea of hiding a few bucks inside the home, the underbelly of your mattress is not a safe place for large sums of cash.

So today, I want to talk about where to put your rainy day savings so that it’s readily available as well as protected from fire, floods, and meth heads.

Note that all accounts are FDIC insured up to $250K.

ING Direct Orange Savings Account

  • APY (Annual Percentage Yield): 0.80%
  • Minimum opening balance: $0
  • Fees: None
  • Remote deposit: Yes
  • Paper checks: No
  • Withdrawal/transfer limit: 6 per calendar month
  • Annual interest earned on $10,000: $80

My emergency fund has been with ING Direct since the annual interest rate on their savings account was 4.75%. In other words, I’m a longtime customer. Other financial institutions offer better yields, but I’ve stuck with ING because I trust them to not screw me over.

Even though I highly recommend the Orange Savings Account, it’s not perfect. In order to access your money, you’ll need to transfer funds from your savings account to a checking account. The process can take up to two business days to complete. However, if you have an Electric Orange Checking Account, the transfer happens instantly.

EverBank Yield Pledge® Money Market Account

  • APY (Annual Percentage Yield): 1.01% the first year and 0.76% going forward
  • Minimum opening balance: $1,500
  • Fees: $8.95 monthly fee in any month your average daily balance dips below $5,000
  • Remote deposit: Yes
  • Paper checks: Yes
  • Withdrawal/transfer limit: 6 times per month, $10 fee applies afterward
  • Annual interest earned on $10,000: $101

First off, the interest rate on this account is very competitive. It’s hard to find savings accounts paying a full percentage point of interest these days. But as you probably noticed, your interest rate drops to 0.76% after one year. What’s that about?

Plus, your account is subject to a minimum balance fee. I don’t care if I have $50K in savings, I don’t even want to think about the possibility of getting slapped with a fee when I can least afford it.

You can make deposits from home, but you’ll need a desktop scanner. Many people don’t own a scanner. Maybe I’m spoiled, but I expect banks to provide a mobile deposit option to their customers.

Ally Bank Online Savings Account

  • APY (Annual Percentage Yield): 0.89%
  • Minimum opening balance: $0
  • Fees: Yes, but they’re totally reasonable. For example, you’ll incur a fee when you overdraw your account.
  • Remote deposit: Yes . . . via the same antiquated process employed by EverBank. Really? What’s so hard about offering mobile deposit to your customers?
  • Paper checks: No, but you can use an ATM to withdraw money from your account.
  • Withdrawal/transfer limit: 6 times per month, $10 fee applies afterward
  • Annual interest earned on $10,000: $89.40

I tried to open an Ally Bank account a while back. After entering all of the information requested online, Ally informed me I’d have to fill out paper documents to finish the application process. That’s too much work. Why Ally Bank doesn’t accept an online verification process like many modern day financial institutions is beyond me. Needless to say, I don’t have an Ally Bank savings account.

The information provided above is as of July 23,2012.

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{ 5 comments… read them below or add one }

femmefrugality July 23, 2012 at 12:36 PM

I try to steer clear of accounts with fees, but the higher interest rate may be worth it if you’re steadily keeping that much money in your MMA.
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Shawanda Greene July 23, 2012 at 12:39 PM

I’m with you. Even if I’ll never incur a fee on the account, it’s something about the existence of a fee that just makes me mad.
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Lance@MoneyLife&More July 23, 2012 at 2:42 PM

If you have an Ing direct checking account you can transfer your efund to checking instantly and write checks on it. Granted a book of checks cost $5 I believe.
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Shawanda Greene July 23, 2012 at 3:15 PM

Thanks for the tip!

I have an ING Orange Checking Account that I never use. The only reason I keep it is so that I can have instant access to my savings. Now, all I need to do is find my debit card to the account. :)
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