If you are planning to start your emergency fund, then you should learn a bit more about where to keep it. Here you will find the best places to stash your emergency savings.
Having an emergency fund is one of the most important things you will need as an adult. Counting with this fund can help you deal with unexpected expenses and critical situations.
The thing is: Where should you keep this fund? Take a look at this list and check the best places to stash your emergency savings.
High-yield savings account
The best decision you can make when saving money is to maximize your deposits and earn interest in your fund. So, instead of opening a traditional savings account, you should save with a high-yield savings account.
This type of account offers higher interest rates and even the power of compound interest. This means that you can earn interest not only on your original deposit but also on your earned interest.
Certificates of deposit (CDs)
This type of account works like a saving accounts, but it involves that the bank withholds a determined amount of money for a fixed period of time, and in exchange, you will receive interest.
A CD offers a higher APY than other savings accounts in exchange for holding your money for a period of time (from 6 months to 5 years). Once you reach the maturity date, you will have access to your money with the added interest.
Bear in mind that withdrawing your money earlier means you will be penalized.
Money market accounts (MMA)
This is also a good option to keep your emergency fund, as you can get a high-interest rate and maximize your deposits. The downside of this account is that you may face fees or a minimum deposit.
The main difference between money market accounts and other savings account is that with MMAs you can use a debit card and even write checks.
These bills are a type of security that is a debt obligation of the US government. They are issued and matured within a year.
Treasury bills are usually in denominations of $100 and you will be providing a short-term loan to the government and then receive the same amount with some interest.