This is going to be such a “duh” idea, but I hadn’t really thought of it until now, so I’m going to share it with you.
Our emergency savings is in ING Direct, where it earns 3 percent APY.
We have a brick & mortar bank which we use for our debit card purchases, depositing checks, and getting endless rolls of quarters to do laundry.
Our savings account there earns a whopping .3 percent interest. Yeah. Not much.
A few times per month, I electronically transfer some money from our brick & mortar bank to our ING account.
It takes about five to seven business days for the money to be accessible in our ING account. For awhile, that money is just in limbo.
Before I transfer the money, it just sits available in our checking account where it can be spent if I’m not careful.
Since we’re so stinkin’ close to finishing our six-month emergency fund, I really want to just finish it as fast as possible.
Our checking accounts are linked to a savings account, which we can access online. I can put money in that savings account, serving as a holding area or waiting room, until I am ready to transfer it to ING.
I can be more aggressive and put more money in that low-interest savings account knowing that I do have the option of transferring some back to our checking account immediately, if we needed to.
Because once I send it to our real emergency fund, it’s there to stay unless we have a true emergency.
I won’t earn much interest on that money while it’s waiting around. But, it’ll be harder for me to spend if it’s sitting there instead of in my checking account, and I might end up with more to save each month.