Saving & Emergency FundsBeginner4 min read

Where to keep your emergency fund

Not under your mattress. Not in your 401(k). Not in crypto. Here's the boring right answer.

An emergency fund has exactly two jobs: be there when you need it, and lose as little purchasing power as possible while you wait. That rules out a lot of popular options.

The right tool: high-yield savings

A high-yield savings account (HYSA) at an online bank typically pays 10–20x what a traditional brick-and-mortar savings account pays. As of recently, good HYSAs pay around 4% APY. Your money is FDIC-insured up to $250,000 per depositor per bank, accessible in 1–2 business days, and won't lose value.

Why it matters

$20,000 in a Chase savings account earning 0.01% makes $2 a year. The same amount in a 4% HYSA makes $800 a year. You should not have to do anything for that $798 except change banks once.

Things not to do

Don't invest your emergency fund in stocks or index funds. It's supposed to be boring cash, not on a 30% ride.
Don't put it in a CD with a 1-year lockup. The whole point is instant access.
Don't keep it in checking. That just invites you to spend it.
Don't keep it in crypto. You already know why.

One sneaky option: Series I bonds

I-bonds (US Treasury inflation-protected bonds) can be a nice complement to an HYSA for the portion of your emergency fund beyond the first 3 months. They track inflation, are state-tax-free, and you can't access them for 12 months after buying. Because of that lockup, they're a supplement, not a replacement.

Put this into practice

Worth tracks your accounts, budgets, and goals — so the concepts in this article aren't just theory.

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