Where to put an Emergency Fund

Most financial planning advice will tell you to have three to six months of living expenses in cash or some other liquid asset.  The last 9 years, interest rates were so low that parking your cash in a savings account yielded next to nothing.

The recent interest rate increases allowed some banks and financial institutions to offer Money Market accounts with 10 to 15 times higher interest rate than a regular savings account.  CDs of course offer a bit higher interest rates, but then you will tie up your money for 11 or 12 months at a minimum, which defeats the purpose of an emergency fund.  You need it to be relatively liquid.

As noted in many websites such as NerdWallet and The Ascent, Money Market accounts have limits on the number of withdrawals per month.  But hopefully, you only need to withdraw money in emergencies - A/C needs replacing, major car repair, roof replacement, job loss, and such.  This is not for frivolous purchases, or even running out of grocery money for the month.

Anyway, a quick Google search returns the top two as of this writing are Marcus by Goldman Sachs and CapitalOne 360 Money Market.  They are able to give high interest rates because these are online only offerings.  I hesitated at first, because I wondered how I would withdraw the money.  It turns out, you can transfer it to your existing checking account, even if it was at another bank.  I'm pretty sure there is some delay here, like two business days, so I would not recommend to put everything in such an account.

Sold on the idea of higher interest rates, I decided to give both a try.  While both are relatively easy to set up, I would recommend Marcus for ease of setup.  Marcus allowed me to add a joint account holder right in the application process, while CapitalOne required that I go to Account Management AFTER the account was set up.  Also, CapitalOne threw a few errors saying that "details cannot be displayed" or "cannot perform action at this time", something about the account being new.  With Marcus, I was able to change the account nickname for example.  Both took less than 10 minutes, as long as you have all the information you need, like SSN.

CapitalOne has a lower interest rate, but has a bonus if you maintain a specific balance in the first 90 days.  So if that's what you're after, go for CapitalOne.

You will also find that in the fine print, the APR rate quoted is only for $10,000 and above.  Anything below would drop the APR down to something like 0.87%.  So keep that in mind.

All in all, I would still go with Marcus just for the ease of use.  Note that interest rates are variable, so it is worth checking every six months whether you can get a better rate elsewhere.