• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

National Debt Relief

National Debt Relief - A+ BBB Accredited Business - Get Relief From Credit Card Debt, Medical Bills And Unsecured Loans

Talk to a debt counselor toll free:

800-300-9550

Get Relief From Credit Card Debt

Medical Bills and Unsecured Loans

  • Apply Now
    • Qualifications
    • Is This Right For Me?
  • Proven Results
    • Debt Relief Benefits
    • Credit Card Debt Relief
  • Debt Relief
  • Credit Card Debt Relief
  • Debt Consolidation
  • Login
HomeBlog Personal FinanceWhat is the Best Way to Keep an Emergency Fund?
Video Transcript

Free Debt Consolidation Quote

By clicking "Get Free Quote", you agree that the phone number you are providing may be used to contact you by National Debt Relief (including autodialed and prerecorded calls, as well as text/SMS messages). Msg. and data rates apply, and your consent to such contact is not required for purchase.
  • National Debt Relief, LLC BBB Business Review
  • McAfee SECURE sites help keep you safe from identity theft, credit card fraud, spyware, spam, viruses and online scams

What is the Best Way to Keep an Emergency Fund?

February 18, 2021 by Josephine Nesbit

See what is the best way to keep an emergency fund
Learn about what is the best way to keep an emergency fund

Life has its difficulties; things happen. What would happen if you suddenly lost your job? Do you have enough savings to cover necessary expenses to keep you and your family afloat until you find a new job? Job loss on top of a million other possible emergencies is the reason why everyone needs to have an emergency fund tucked away.

Nearly 25% of Americans have no emergency savings, and almost half of Americans could only handle a $1,000 emergency by dipping into savings. You need a place where you can safely keep and build your emergency cash. We’ll explore the best way to keep an emergency fund and the pros and cons of each.

What’s the Best Way to Keep an Emergency Fund?

The best way to keep an emergency fund is to separate it from your other regular checking and savings accounts. If you’re looking for the best way to keep an emergency fund — besides hiding it under the mattress — consider these savings vehicles.

High-Yield Savings Account
A high-yield savings account is a bank account where you can deposit money and typically earn a higher interest rate on your deposits. So what does this mean? It means a better return on your deposits. The interest rate is what the bank pays you to keep your money in that account.

Some banks may require you to make large deposits to open a high-yield savings account. In addition, you might have to maintain a large balance to avoid fees, earn interest, or keep your account open. If you’re interested in a high-yield savings account as the best way to keep an emergency fund, make sure it’s an account that offers the best return with little to no effort on your end.

Here are possible advantages and disadvantages:

Pros

  • Potential for better returns
  • Funds are easily accessible
  • Funds can be transferred quickly between linked accounts
  • FDIC-insured bank or credit union offers safety

Cons

  • Check-writing limits
  • Not an ideal investment with 1-2% rates
  • Online only
  • Higher interest rates normally have a cap after which you won’t earn interest on the higher rate

Money Market Account
A money market account is like a high-yield savings account, but it has features similar to a checking account. It generally comes with checks or a debit card with a limited number of monthly transactions. A money market account is a deposit account that pays interest based upon current interest rates.

Possible advantages and disadvantages:

Pros

  • Depositing funds or transferring money between linked accounts offers convenience and flexibility.
  • Because of checking account features, funding a large expense can be done quickly with little stress.
  • Interest rates are competitive, similar to a high-yield savings account.
  • You get safety and security with an FDIC-insured bank or credit union.

Cons

  • Some banks may have a higher minimum balance requirement.
  • While some accounts might offer great rates, others may offer an APY similar to a traditional savings account. Another possibility is having to qualify for a higher rate by first meeting a certain minimum balance.
  • Banks can charge monthly maintenance fees for having an open account, but it may be possible to waive the fee by meeting daily balance or direct deposit requirements.
  • While these accounts are subject to federal Regulation D limits, which is six withdrawals per month, banks can impose in-house limits.

Certificate of Deposit
Certificates of Deposit (CDs) are typically issued by commercial banks that restrict access to invested funds but offer much higher interest rates. When you open a CD, you must choose a specific period. Terms can range from three months to five years, with longer terms usually offering higher rates. If money is withdrawn before the end of the term, there are typically penalties.

Here are potential pros and cons of using a CD as the best way to keep an emergency fund:

Pros

  • CDs are offered through FDIC-insured banks and credit unions.
  • They offer better returns than savings deposits.
  • Fixed, predictable returns; CDs deliver a specific yield within a certain period.
  • A wide selection of terms exists to help investors choose a term that best suits their needs.
  • A wide selection of account options exists, such as no-penalty CDs that allow savers to get a better interest rate with the option to close the account with no penalties.

Cons

  • Because of limited liquidity, savers may have difficulty accessing funds in a time of need and usually have to pay a penalty for early withdrawal.
  • Because rates are fixed, there’s a risk of inflation.
  • Returns are typically lower than other higher-risk asset classes.
  • There’s reinvestment risk with CDs. When interest rates are going down, savers who locked in a rate will need to invest in lower-yielding CDs when their CD matures.
  • Savers must pay taxes on accrued interest.

Traditional Bank Account
We can add traditional bank accounts to the list of best ways to keep an emergency fund. Here are a few pros and cons of traditional accounts:

Pros

  • They are easily accessible and can be withdrawn at any time.
  • You can access your account online or go to a brick-and-mortar bank or credit union, depending upon which one you choose.
  • Your money is safe with FDIC-insured banks or credit unions.

Cons

  • Traditional accounts are low-yield, and you won’t see the same return as with other account types.
  • Interest earned is taxed as ordinary income.
  • It’s easy to withdraw money at any time, even when it’s not an emergency.

Best Way to Keep an Emergency Fund

There’s no single best way to keep an emergency fund, and regardless of what you decide, you can always choose more than one option. Allocating money to different accounts gives you multiple options for financing your emergency.

Do you qualify for debt consolidation?

Primary Sidebar

Consolidate Your Debt!
Find out how NDR could help.
  • Get one low monthly payment
  • Avoid bankruptcy
  • Get out of debt in 24-48 months
Get Your Free evaluation
Free Debt Consolidation Quote
By clicking "Get Free Quote", you agree that the phone number you are providing may be used to contact you by National Debt Relief (including autodialed and prerecorded calls, as well as text/SMS messages). Msg. and data rates apply, and your consent to such contact is not required for purchase.
 Trusted By Our Clients

"When I called National Debt Relief, I was at a point where I was"

** Audited by: Dianne Ernsting ** Easy National Debt Relief Caller: Nocona Transcribed WE 2/28/2021 Nocona: The call is recorded. Tell me a little bit about how you came across National Debt Relief and why you decided on their program over some of the others that are available. TRACY: I actually did an internet search. National Debt Relief was the first one that came up. I looked at that one, and I kind of looked at a couple others. And it's been so long, I can't remember exactly what it was that made me interested in National Debt Relief over the others. But I ended up calling to just get some more information. And I talked to a woman. I believe her name was [Sierra Myers 0:01:08] or [Sierra Meyer 0:01:10]. I believe that's her name. Again, it's been a long time since we started the program. I can't remember. I mean, when I called, I was at a point where I was crying on the phone with her. And she was so kind and calm and caring and understood where I was coming from. And we had been through a really bad time. Our granddaughter had died at birth. And I just had gone into a complete tailspin. And that's why we ended up where we were. So I got information from her. I talked to my husband. And we decided to go with National Debt Relief. Nocona: Tell me a little bit about the customer service side of things. How did you feel about the way they handled any questions you had along the way or just the communication overall? What was it like? TRACY: I've been very pleased with the communication overall. I sometimes wish that things could go a little bit faster. [chuckles] But that's just because I just want to get through the program a little bit quicker. But just based on where we are and what we had to do and how much money we can put into it every month, we are doing what we can. But when I call and I have questions, they always answer my questions, and they do it very well. Nocona: Is there anything that you think they could improve about the process or anything you'd like to see them do differently? TRACY: No. The only thing that I know just sometimes -- and I don't think this is on National Debt Relief's side of things, but I know that a lot of times I'll get calls from debtors, and they're wanting information, and they claim that they can't talk to National Debt Relief. But I think that a lot is coming from the creditors' side of things, because they want us to settle with them. So just that part of it can be a little frustrating at times. But again, I think that's probably more on the side of the creditors than National Debt Relief. Nocona: Any advice for people that are thinking they might have to go through this kind of program? Anything that you think is helpful to either be aware of or to be ready for when you start it? TRACY: Definitely be ready for the fact that it's not something that is just a one-year program. It takes a while to get through. That was something that I was definitely not ready for. I didn't expect that we would still be looking at being in the program for at least another year, is something that I definitely did not expect. 'Cause I believe we started in 2018. And I had kind of hoped that at this point in time we would be getting ready to graduate from the program. So that's something that someone should be aware of. Not that it's a bad thing. Just being aware that it does take longer than what you think it will. Nocona: Just based on the experience you had going through the program, where would you put National Debt Relief from a one to a five, a five would mean you would definitely recommend signing up to their service, a one means you're very dissatisfied? TRACY: I would say 5. Nocona: Is it okay if we share your comments as a review on our public website to help people that are considering debt relief programs? TRACY: As long as you don't use my last name. Nocona: Yup. We don't publish last names. It just goes out with a first name. So it would just be under 'Tracy' if that's okay. TRACY: Yes, that's fine. Nocona: I have farney7218@gmail.com. Is that the right address for you? TRACY: Yes, it is.

Trustpilot star rating Trustpilot star rating Trustpilot star rating Trustpilot star rating Trustpilot star rating

Tracy Sitko-Farney
ConsumerAffairs Reviews

Latest Personal Finance Posts

  • What is the Best Way to Keep an Emergency Fund?
  • The 5 Easy Steps To Start An Emergency Fund
  • How Much Should My Emergency Fund Be?
  • Take Control Of Your Finances And Make Them Emergency Proof
  • Find a Good Savings Plan for 2021
National Debt Relief, LLC BBB Business Review AFCC Top Ten Reviews Gold Top Consumer Reviews Consumers Advocate Trust Pilot
Company
  • About Us
  • Contact Us
  • Blog
  • Careers
  • Corporate
  • Privacy Policies
  • Terms Of Site
  • Disclaimer
  • Sitemap
Products
  • Debt Relief
  • Credit Card Debt Relief
  • Debt Consolidation
  • Debt Settlement
  • Calculators
  • FAQs
Debt Resources
  • Credit Card Debt
  • Medical Debt
  • Personal Loan Debt
  • Unemployment
  • Divorce Debt
  • Retiree Debt
  • Veteran Debt
  • Business Debt
  • Personal Finance
Follow Us
  • Facebook
  • Twitter
  • Linkedin
  • Instagram
  • Pinterest

© 2021, National Debt Relief, All Rights Reserved.

Disclaimer
Disclaimer
Disclaimer