Where to Keep Emergency Savings

It's usually best to keep emergency savings in a bank or credit union savings account. These types of accounts offer easier access to your money than certificates of deposit, U.S. Savings Bonds, or mutual funds. Though these are useful tools for long-term saving, they are not ideal for an emergency fund that you may need access to more quickly

But not too quickly. Keeping your money in a savings account makes it much less likely that you will use these savings to pay for everyday, non-emergency expenses. That's why it is usually a mistake to keep your emergency fund in a checking account.

You may well need at least $100 to open the savings account and a $200 minimum balance to avoid monthly fees. In most areas, however, there are several financial institutions with lower minimums. Also, banks and credit unions may waive the minimums if you have other accounts at that institution. Your local Frugal Citizens campaign can help you find a participating financial that offers low- or no-minimum balance savings accounts.