Keep reading to learn more about an emergency fund and how to save money for “what if” scenarios.
Tips to Create an Emergency Fund
In order to create an emergency fund, you need to have savings to set aside. However, you don’t want your savings to sit in the back of your closet or your checking account. So, where do you keep your money?
For an emergency fund, you want to make sure you do the following:
Keep your money safe from market collapses or national financial hardships by placing it in a safe and secure account.
Make sure you have quick access to your account and are able to withdraw money when necessary.
Earn interest to continue building your savings.
Where Should I Put My Emergency Savings?
If you’re wondering where you should put your hard-earned savings, here are your best options:
High yield savings accounts, which are insured by the Federal Deposit Insurance Corporation (FDIC) and offer a higher interest rate than standard savings accounts.
Certificates of Deposit (CDs), which are similar to savings accounts but require your money be untouched for a set term. The longer term you have, the more interest you’ll earn. If you withdraw any principal before the end of the term, you’ll generally need to pay a penalty so you should consider using a CD to hold only a portion of your emergency savings and use other funds first, if needed.
Money market accounts, which are deposit accounts that are also FDIC-insured and offer relatively easy access to funds.
*ANNUAL PERCENTAGE YIELD (APY): All APYs are accurate as of .
APYs are subject to change at any time without notice. Offers apply to personal accounts only. Fees may reduce earnings. For Money Market and High Yield Savings Accounts, the rate may change after the account is opened. For CDs, a minimum of $2,000 is required to open a CD and must be deposited in a single transaction. A penalty may be imposed for early withdrawals. After maturity, if you choose to roll over your CD, you will earn the base rate of interest in effect at that time. The APY shown for CDs and IRA CDs is for a 60-month CD with a balance of at least $25,000. Click here for all CD rates and terms offered.
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NATIONAL AVERAGE: National Average APYs are based on specific product types of top 50 U.S. banks (ranked by total deposits) provided by Informa Research Services, Inc. as of 3/01/2017. CD Rates: Average APYs are based on certificate of deposit accounts of $25,000. High Yield Savings Rates: Average APYs are based on High Yield Savings Accounts of $10,000. Money Market Account Rates: Average APYs are based on Money Market Accounts of $10,000. Although the information provided by Informa Research Services, Inc. has been obtained from the various institutions, accuracy cannot be guaranteed. Please click on "Learn More" above for additional disclosures for each product.