Where to keep a $40,000 emergency fund right now (and where not to)
Summary
This article explains the best places to keep a $40,000 emergency fund in today’s economic situation. It recommends using high-yield savings accounts and money market accounts for both safety and earning interest, while advising against using certificates of deposit (CDs) and traditional savings accounts because of limited access or lower returns.Key Facts
- High-yield savings accounts offer interest rates near 4% and allow easy deposits and withdrawals.
- Money market accounts have similar interest rates to high-yield savings and let you write checks, offering easy access.
- Both high-yield and money market accounts are FDIC-insured up to $250,000, protecting your money.
- Certificates of deposit (CDs) have fixed rates but require funds to be locked in, with penalties for early withdrawal.
- Traditional savings accounts typically pay lower interest rates and are less profitable for emergency funds.
- Inflation is currently at a three-year high, making careful money placement important.
- Higher interest rates make borrowing more expensive, increasing the need for accessible emergency funds.
- Online tools make it easier to compare rates and find the best savings options available.
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