Update: As of 1/22/13, ING Direct has merged with another company. We still have our savings there, but it is now called something different.
The first “Baby Step” in Dave Ramsey’s Total Money Makeover is to set aside a $1000 Emergency Fund. I love the idea behind this fund, you set this up before you start paying off any bills. The idea is that if you start the plan without an emergency fund and a true emergency comes up (hospital stay, car trouble, etc), then you are bound to fall right back on your credit card if you don’t have anything set aside. Your emergency fund is supposed to be “liquid” and not kept somewhere you don’t have access to right away. Again, if you can’t get to it immediately or you will take a penalty for withdrawing money, you will most likely use a credit card.
The perfect arrangement for us is
ING Direct. We opened a savings account and linked up our local checking account to it. We can transfer money anytime we need, but it takes 24-48 hours for the money to be available. This prevents us from withdrawing the money for anything but a “true” emergency. At least it gives us time to think about whether it is a “true” emergency or not.
When we first signed up a few years ago, the interest rate was around 4.5%. With the economy tanking, we have watched it slowly come down to around 1.1%. I know this seems low, but I have compared rates to several other savings accounts and they are all similar. There isn’t one that offers anything high enough to make it worth it for us to switch.
If you’re looking for an option for an additional savings account or even an interest-earning checking account, check out
ING Direct. It’s super easy to use and easy to sign up. Check out www.bankrate.com for tons of information about interest rates for savings accounts, CDs, retirement plans, mortgage, etc. You may find something that works better for you.
Where do you keep your savings? Do you have an account or company that you have been really happy with?