How to Set Up Your Emergency Savings Fund

Quick Look

  • Your emergency fund savings should be in a dedicated account and not commingled with your day to day spending account.
  • Find an account that ensures your emergency fund savings are fully liquid – like a savings or checking account.
  • Find a trusted institution that offers the good rates. Sites like can help you compare rates.

Read below, then get started!

You can setup your emergency fund savings account in minutes. But before you do, take a quick look at the questions and answers below to ensure you’ve optimized it for your needs.

Why keep your emergency fund savings in a separate account?

Having your fund in a separate account means you…

  • Always know exactly how much money you have that is truly dedicated to emergencies. 
  • Don’t need to look at that account for everyday transactions so you’ll be less tempted to use it.
  • Can focus on finding an institution that offers the best interest rates and worry less about other features you won’t need (e.g. things like the convenience of ATMs and even the website matter less for an account you will rarely access).

Why does “fully liquid” mean?

Your emergency fund savings should be

Your emergency fund savings should be “liquid.” This means your money can easily move from one account to another or be spent without any penalty.

“Fully liquid” means you have immediate and penalty-free access to your emergency fund savings. For example, Certificate of Deposit accounts (CDs) can sometimes (but not always) offer slightly higher interest rates than a checking or savings account. However, with a CD you essentially have to promise that you won’t use the money in that account before the deposit term is up. If you take your money out before that time, you’ll have to pay a penalty. And that penalty will more than likely eat up any minor gains you got with a slightly higher interest rate.

Additionally, in the last many years many online banks offer nearly as good or even better rates on their highest rate checking and savings accounts as they do with any other types of accounts. 

How can I find the best rates? is one of the longest standing and most widely used rate comparison sites. Articles like this one are regularly updated and compare rates for checking and savings accounts and provide a nice summary of other key features (like account minimums or other requirements). Another popular comparison site is

Are there any other features I should consider?

While rates are one of the most important things for an account that’s essentially just meant to sit idle, a small difference in rates isn’t going to add up to much. (Obviously, this becomes less true the more money you have in your emergency fund.) Therefore, once you’ve narrowed down the top 5 to 10 institutions with the top rates, consider these other two factors:

  • Website: Go to the website and see if it’s easy to navigate and intuitive. Even though you won’t know exactly what it’s like until you open an account, you can get a pretty good sense for the features it has by looking at promoted features. 
  • Customer Service: Test out their customer service line by giving them a call. How long is the hold time? Is it easy to speak to a real person?

How do I open an emergency fund savings account?

Once you’ve determined the institution you want to go with, opening your account is usually as simple as clicking a button on the company’s website and following the prompts. During this process, be prepared to provide the following information:

  • Social Security number
  • Mailing address
  • Date of birth

If you’re opening an account in person, you will also need to provide a photo ID and sometimes another form of identification like your physical social security card or a birth certificate.

Finally, depending on the account, you may need to make an initial deposit. This can either be done via an online transfer from another bank, with a check, or a debit card. Here’s how much you’ll want in your emergency fund if you’re in the “Security” tier of financial wellness.

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