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ING does not have any building anywhere near where I live. The reason for the emergency fund is to keep up with mortgage payments and bills if my dh were to loose his job. I do not foresee a reason to need to take all the money out from one day to the next.
That's not the only potential emergency, though. There is simply no way I'd send it out of town. If it makes you 10 bp more (for example), that isn't sufficient incentive by a long shot, because the job of this money is not to be an investment--income is a secondary consideration, and liquidity and principal preservation are the primary considerations.
I agree. Use only banks with plenty of local branches, and not those closest to failure, unless too big to fail I guess. I chose JPMorganChaseWamu for most of my savings. If no local branch then I think you can expect worse service, with a greater possibility of no service when push comes to shove.
We have Wamu now and I already started to see changes. The other day I was transferring money from savings to checking when I saw a new message on the screen. After 6 transfers there is a fee. I expect this number to go down. The number of NSF waived fees allowed has already dropped from 2 to 1. Wamu was great while it lasted but Chase is not for us.
That's not the only potential emergency, though. There is simply no way I'd send it out of town. If it makes you 10 bp more (for example), that isn't sufficient incentive by a long shot, because the job of this money is not to be an investment--income is a secondary consideration, and liquidity and principal preservation are the primary considerations.
We want to have a 9-12 month emergency fund. We think our monthly expenses could be around 3k/month but I have to do the numbers. So it would be 27-36k.
Does anyone know any banks that offer good interest rates? We are considering Ing Direct at 1.65% APY.
I have had an ING savings acount for 6 years, it's great and very easy to use (savings and CDs). I also use GMAC Bank (gmacbank.com) which is also great with better interest rates. I use these two along with a local Credit Union to have my funds evenly distributed. They are all FDIC insured, so no worries, check them out and let me know what you think.
Basis points. Used in investing/financial discussion. 1 bp = 0.01%. Thus, if you get 1.75% interest and I get 1.68%, you surpassed me by 7 bp. It helps clarify issues of 'a percent of a percent' that can lead to misunderstanding, because '7 bp' is less clunky than '7% of 1%' or '.07%', etc.
I like to keep my money in local banks/credit unions for several reasons:
Local banks and credit unions loan money out to your friends and neighbors to buy homes or start businesses. Big banks loan your money in places that won't help your wallet.
Local banks and credit unions hire people from the local community to build their offices, work in their call centers, prepare statements, maintain their computer systems, and they pay taxes to the local government. If I keep my money in an online account with no local branch, all of that money goes somewhere else.
In my experience, local banks (and especially credit unions) tend to be a lot more flexible and charge fewer fees than banks.
BOA, Citi, etc. pay their executives outrageous bonuses, line up to feed at the federal trough, engage in risky business practices, mistreat employees, etc. Why would I want to encourage that behavior by giving them my business?
Plus, even if you don't care about the local economic impact, a significant deposit with a local credit union gives you pull with them. B of A wouldn't give a rip if I parked six figures with them. (If I were dolt enough to do that, I wouldn't deserve a rip anyway.) But doing something approaching that with my local credit union tends to make them want to accommodate me. And it is actually handy at times in life to be someone your banker would just as soon not annoy.
For example, when I rolled my CDs, the banker I talked to at my CU (not the one I normally deal with, who was out of town) made an error and quoted me 3.55% (way above market) rather than the 2.55% (going rate) she should have. I didn't comment at the time, but when I looked into it, I got curious and called my usual contact. Since we have a great relationship (which, according to my rules of life, means I should overlook the occasional human error that doesn't hurt me all that much), I wasn't calling to pressure her to honor the way-above-market rate; I was just interested to see if she knew what had happened. She did. Her designee had gone to her, confessed the error, and the decision had already been made to honor the higher rate.
I don't think this happened because of my charming, winsome personality. I don't have one of them. I think it happened because they like holding onto a big piece of my money, and want to keep doing so. (And, in fairness, I think honest professionalism and integrity played a part.) But had this been a big commercial bank, they'd probably have just said: "Well, we're just awfully terribly sorry, sir, but it's just not happening." And it would have taken a phone call from me to even create an issue; otherwise, they'd just have put it at the lower rate and figured either I wouldn't notice, or that if I did, tough bananas.
Think of it this way. What all can your reserve do for you? It can give you some cushion against a bad situation. It can earn you a little money while it does so. Those things you expect of it, and you already know. But if you put it with the right local institution, it can also get you some minor perks and considerations just by existing. It will get you nothing of the kind from an out-of-town bank.
My CU's policy is to require 24 hour's notice to get more than 5K in cash, but they've been happy to bend that rule for me on several occasions. Another perk is that the tellers get to know you well enough that you can still get money when you forget to bring your ID.
There's no point in keeping an EF in a checkings account: I say go for a MMA or a savings account like ING. It takes about one day to transfer the money into your checkings account, plus if you are in a emergency/need money today, you could always put it on a credit card and pay it back when you get the money transfered.
I would only keep extra money in CDs outside of your EF because there are usually penalties for taking it out early.
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