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Best Places to Keep Your Emergency Fund

Review Updated
Matt Frankel, CFP®
By: Matt Frankel, CFP®
Matt Frankel, CFP®
Matt Frankel, CFP®
Writer, Analyst

Matt is a Certified Financial Planner™ and investment advisor based in Columbia, South Carolina. He writes personal finance and investment advice for The Ascent and its parent company The Motley Fool, with more than 4,500 published articles and a 2017 SABEW Best in Business award. Matt writes a weekly investment column ("Ask a Fool") that is syndicated in USA Today, and his work has been regularly featured on CNBC, Fox Business, MSN Money, and many other major outlets. He’s a graduate of the University of South Carolina and Nova Southeastern University, and holds a graduate certificate in financial planning from Florida State University.

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Our Banking Expert

Nathan Alderman
Check IconFact Checked Nathan Alderman
Nathan Alderman
Nathan Alderman
Fact checker

Nathan Alderman has worked with The Motley Fool since 2005, making errors his arch-enemies in a variety of roles including a six-year stint as the dedicated fact-checker for The Motley Fool's premium newsletter services. As The Ascent's Compliance Lead, he makes sure that all the site's information is accurate and up to date, which ensures we always steer readers right and keeps various financial partners happy. A graduate of Northwestern University's Medill School of Journalism, Nathan spends his spare time volunteering for civic causes, writing and podcasting for fun, adoring his wife, and wrangling his two very large young children.

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Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page. APY = Annual Percentage Yield. APYs are subject to change at any time without notice.

Having an emergency fund is important because you don't want to have to sell investments, borrow from your retirement plan, or use a credit card every time an unexpected expense occurs.

Read on for a closer look at the best places to keep your emergency fund.

Best places to keep your emergency fund

  • We pride ourselves on being able to confidently say that these bank accounts are chosen by personal finance experts that operate independently of our Partnerships team, meaning the picks on this page are not and never have been influenced by advertising deals.

    Our Ratings team:

SoFi Checking and Savings
Open Account for SoFi Checking and Savings

On SoFi's Secure Website.

Member FDIC.

More details on the best places to keep your emergency savings

Ratings Methodology
Rates as of Jul 16, 2024
Award Icon 2024 Award Winner

SoFi Checking and Savings

Open Account for SoFi Checking and Savings

On SoFi's Secure Website.

Member FDIC.
Rating image, 4.50 out of 5 stars.
4.50/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
 = Best
= Excellent
= Good
= Fair
= Poor
Rating image, 4.50 out of 5 stars.
4.50/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
 = Best
= Excellent
= Good
= Fair
= Poor
Open Account for SoFi Checking and Savings

On SoFi's Secure Website.

Offer Alert
New customers can earn up to a $300 bonus with qualifying direct deposits!¹
APY
up to 4.60%² Rate info Circle with letter I in it. You can earn the maximum APY by having Direct Deposit (no minimum amount required) or by making $5,000 or more in Qualifying Deposits every 30 days. See SoFi Checking and Savings rate sheet at: https://www.sofi.com/legal/banking-rate-sheet.
Min. To Earn APY
$0
  • Competitive APY on both Savings and Checking
  • No account fees³
  • Welcome bonus up to $300 (direct deposit required)¹
  • Early access to direct deposits⁶
  • Tools to help you track savings goals
  • Unlimited number of external transfers (up to daily transaction limits)
  • ATM access⁵
  • FDIC insured (up to $2M with opt-in to SoFi Insured Deposit Program)⁴
  • Combo account only; no stand-alone savings or checking
  • Maximum Savings APY requires direct deposit
  • Overdraft protection⁷ requires monthly direct deposit minimum
  • No branch access; online only

Only offered as a combination account, the SoFi Checking and Savings account could be a great fit for people who want to keep their emergency funds separate from their main checking account, but at the same financial institution. SoFi even offers a feature that allows users to separate a single savings account into several different purposes. If you use direct deposit into the SoFi checking account, the savings portion of the account will earn at a higher APY, and you'll have easy access to your money through a large ATM network.


SoFi Disclosures

  1. Bonus disclosure: New and existing Checking and Savings members who have not previously enrolled in Direct Deposit with SoFi are eligible to earn a cash bonus when they set up Direct Deposit of at least $1,000 during the Direct Deposit Bonus Period. Cash bonus will be based on the total amount of Direct Deposit. Direct Deposit Promotion begins on 12/7/2023 and will be available through 12/31/24. Full terms at sofi.com/banking. SoFi Checking and Savings is offered through SoFi Bank, N.A., Member FDIC.
  2. APY disclosure: SoFi members with Direct Deposit can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the 4.60% APY for savings (including Vaults). Members without Direct Deposit will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
  3. Fee policy: Our account fee policy is subject to change at any time.
  4. Additional FDIC insurance: SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per legal category of account ownership,asdescribed in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $2M through participation in the program. See full terms at SoFi.com/banking/fdic/terms. See list of participating banks at SoFi.com/banking/fdic/receivingbanks.
  5. ATM access: We’ve partnered with Allpoint to provide you with ATM access at any of the 55,000+ ATMs within the Allpoint network. You willnot be charged a fee when using an in-network ATM, however, third-party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
  6. Early access to direct deposit funds: Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.
  7. Overdraft protection: Overdraft Coverage is limited to $50 on debit card purchases only and is an account benefit available to customers with direct deposits of $1,000 or more during the current 30-day Evaluation Period as determined by SoFi Bank, N.A. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the“30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Members with a prior history of non-repayment of negative balances are ineligible for Overdraft Coverage.
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Discover® Money Market

Open Account for Discover® Money Market

On Discover Bank's Secure Website.

Member FDIC.
Rating image, 4.50 out of 5 stars.
4.50/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
 = Best
= Excellent
= Good
= Fair
= Poor
Rating image, 4.50 out of 5 stars.
4.50/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
 = Best
= Excellent
= Good
= Fair
= Poor
Open Account for Discover® Money Market

On Discover Bank's Secure Website.

Monthly Fee
$0
Min. Balance
$2,500 to open, no min balance to maintain
APY
4.00%-4.05% Rate info Circle with letter I in it. 4.00% applies to balances under $100K, Need $100,000+ to earn 4.05%
Min. To Earn APY
$0.01-$100,000 for 4.00%; $100,000+ for 4.05%
  • Competitive APY
  • No minimum balance to maintain account
  • No monthly fee
  • Debit card and check availability
  • FDIC insured
  • Required balance to open is a little high
  • Best rate requires at least $100,000
  • No in-person banking/branches

The Discover Money Market account offers a range of high APYs depending on the account balance, and has no monthly fees. It has a debit card as well as check-writing availability, so you can get to your money quickly if an unexpected expense arises. The biggest drawback is the $2,500 minimum opening balance (but there is no minimum ongoing balance requirement).

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Award Icon 2024 Award Winner

CIT Platinum Savings

Open Account for CIT Platinum Savings

On CIT's Secure Website.

Member FDIC.
Rating image, 4.50 out of 5 stars.
4.50/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
 = Best
= Excellent
= Good
= Fair
= Poor
Rating image, 4.50 out of 5 stars.
4.50/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
 = Best
= Excellent
= Good
= Fair
= Poor
Open Account for CIT Platinum Savings

On CIT's Secure Website.

APY
5.00% APY for balances of $5,000 or more Rate info Circle with letter I in it. 5.00% APY for balances of $5,000 or more; otherwise, 0.25% APY
Min. To Earn APY
$100 to open account, $5,000 for max APY
  • Competitive APY
  • No account opening or maintenance fees
  • Unlimited number of external transfers (up to daily transaction limits)
  • Interest compounds daily so your money can grow a bit faster
  • FDIC insured
  • Balance requirement for maximum APY
  • No branch access; online only

The CIT Platinum Savings account is a great choice for people whose main priority is maximizing their savings yield. It offers a high APY for balances of $5,000 or more with no account fees. The biggest drawback is accessibility -- while there are unlimited transfers to/from the account, there is no ATM access, branch access, or check-writing. However, if you can deal with waiting a day or so for your money if you need it, this could be a great way to get the most out of your cash.

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Award Icon 2024 Award Winner

Ally Money Market Account

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Member FDIC.
Rating image, 5.00 out of 5 stars.
5.00/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
 = Best
= Excellent
= Good
= Fair
= Poor
Rating image, 5.00 out of 5 stars.
5.00/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
 = Best
= Excellent
= Good
= Fair
= Poor
Read Review
Monthly Fee
$0
Min. Balance
$0
APY
4.20%
Min. To Earn APY
$1
  • FDIC insured
  • No monthly fee
  • ATM access
  • Checking privileges
  • No cash deposits
  • No branches

Money market accounts make a lot of sense for emergency funds, as they combine the high APYs of online savings accounts with the accessibility of checking accounts, which can be valuable if you need to quickly tap into your emergency fund. The Ally Money Market account has a high APY, no minimum balance, no monthly fees, plus ATM access and check-writing privileges that can allow you easy access to your money if you need it.

How much should you have in your emergency fund?

The most common guideline used by financial planners is that you should aim to have six months' worth of expenses saved in a readily accessible account. Setting aside six months' worth of rent or mortgage, car payments, utilities, groceries, insurance, and other expenses can seem like an extremely intimidating task.

Having said that, six months is a good eventual target for an emergency fund, but you might need more or less, depending on your situation. For example, if you're married or living with a partner and you both have extremely stable jobs and little debt, you may be well prepared for emergencies with far less than six months of expenses. On the other hand, if you have a relatively unpredictable income, you may want to aim even higher.

While there are some very good reasons financial planners use the six-month guideline -- specifically to deal with periods of unemployment -- many people don't reach this target for years, even if they save responsibly. The key is to get started and set milestone goals along the way, such as $1,000 or $2,000. With each milestone, you'll be better equipped to deal with unexpected financial challenges than you were before.

Learn More: Emergency Fund Calculator

Where to keep your emergency fund

There are several places you can keep your emergency fund. As long as it's in a secure place that you can access quickly in emergencies, and have little chance of losing money, you aren't making a bad call.

Keeping your emergency fund in a high-yield savings account

Perhaps the most logical place to keep your emergency fund is in a high-yield savings account offered by a reputable, FDIC-insured financial institution.

High-yield savings accounts are somewhat of a recent phenomenon. With the surge in financial technology in recent years, the online banking industry has grown rapidly, and many banks offer easy-to-navigate online savings account products. Because these companies don't have to pay for a branch network, they can pass the savings on to customers in the form of higher yields.

If you build up a $10,000 emergency fund, a high-yield savings account could mean $450 or more in essentially free money on an annual basis while you're protecting yourself against the unforeseen. Of course, it's important to realize that savings account yields can and will fluctuate over time, but a high-yield savings account can help you maximize your emergency savings in any environment.

Keeping your emergency fund in a money market account

Money market accounts can be smart places to keep emergency savings, as they combine some of the best features of high-yield savings accounts and checking accounts. Being able to simply write a check or swipe a connected debit card is a nice accessibility feature that could make a money market account worth considering.

Money market accounts often have higher minimum deposit requirements than savings accounts. For example, there are accounts on our top money market account list that have minimum opening balance requirements as high as $2,500. With emergency funds this is less likely to be a roadblock, and there are some options with little or no minimum deposit required. As far as interest rates go, some of the top online-based money market accounts have yields that are on par with what you might expect from a high-yield savings account.

Keeping your emergency fund in a Roth IRA

As a final example, one outside-the-box emergency fund solution is to use a retirement account -- specifically a Roth IRA.

A Roth IRA is a unique investment vehicle that can allow you to save for retirement and prepare for emergencies at the same time. There's a feature of Roth IRAs that allows you to withdraw your original contributions (but not any investment profits) at any time, and for any reason, without penalty. In other words, if you put $5,000 into a Roth IRA in 2022 and added another $5,000 in 2023, and you have an unexpected expense in 2024, you can access as much as $10,000 of the account early.

A Roth IRA isn't perfect for emergency savings. But it can be worth considering if you need to catch up on both retirement and emergency savings.

How to build your emergency fund

If you don't have an emergency fund, or you do but still feel inadequately prepared for emergencies, there is no better time to get started than right now. And here are some steps to do it:

  • Start by opening an account that is separate from your non-emergency checking and savings accounts.
  • Make the process automatic. This is perhaps the best tip to help you get started and stick with your emergency savings plan.
  • Figure out an amount of money you could comfortably afford to contribute to your emergency savings every time you get paid.
  • Set up a recurring automated transfer from your checking account into your designated emergency account.
  • Occasionally make additional contributions. For example, if you get a bonus from your employer, maybe allocate a portion of it to your emergency savings account.

If you do these five things, you might be surprised at not only how quickly your emergency fund builds, but how much peace of mind it gives you knowing that you could get a flat tire or need emergency dental work tomorrow and it wouldn't derail your financial life.

Our bank and credit union methodology

Our methodology for scoring banks and credit unions revolves around evaluating key aspects such as annual percentage yield (APY), brand reputation, fees and minimum requirements, and additional perks.

These criteria are weighted differently across various account types, ensuring a comprehensive assessment that reflects the competitive landscape and economic conditions.

We strictly feature products that offer federal insurance and high customer satisfaction, keeping our recommendations unbiased by advertiser influence. This robust evaluation process helps us generate balanced, reliable best-of lists that guide consumers to top financial products.

Learn more about how The Motley Fool Ascent rates bank accounts.

FAQs

  • There's no perfect answer for everyone, but a high-yield savings account or a money market account is a great choice in most cases. The key is to keep your emergency money in a safe place that you can easily access if you need the money.

  • A CD is generally not a great place for an emergency fund unless it's a no-penalty CD. Most CDs charge you a penalty that is equal to a few months' worth of interest if you withdraw money before the CD's maturity date, and this isn't ideal. There are other places, like a high-yield savings account, that don't have any withdrawal restrictions.

  • It depends. Financial planners generally suggest aiming for six months' worth of your expenses in an emergency fund, but a $5,000 emergency fund will put you in good shape to deal with many potential unexpected expenses.