I am trying to decide what to do with my emergency fund. Looking around I found a bank giving out a 4.09% APY up to $10K USD. This will generate approximately $34 USD/Month.

They require that you do 12 transactions per month and at least one online bill payment.

Is anyone else going through the same hassle to obtain a little more interest rate on your emergency fund?

Could anyone through any other point of view that I am missing?


It is absolutely worth it. My wife and I have two of these accounts (different banks). We are required to use our cards 20 times for one bank, and 15 for the other. We have yet to miss the required transactions in a month (over 15 months of use now), and are actually considering getting a third account. Between the two of us, we simply have to use our card on average once a day.

Getting gas? Use your debit card. Getting stamps? Use your debit card? Self checkout? Use your debit card twice. Eating out? Use your debit card. If married, split the bill.

As soon as we reach the minimum, we stop using the debit cards and switch to credit cards to further boost the rewards. Maybe it's easier for us since we don't have kids and are out a lot, but 12 transactions is really simple to obtain. We receive ~$100 a month from our two accounts, all for doing something we already do.

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  • Just a note, for us logging into mint seems to trigger the "log in" requirement. It also allows us to easily count the number of transactions we have completed. – Scott Nov 15 '11 at 17:00

What qualifies as a transaction? Does the bill pay count? Otherwise, not sure what you'd do to get 12. If this requires you to actively do something 12x per month, not worth it. But I can easily set up 12 online bill payments.

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Overall I think it sounds like it's worth it. It's hard to find that high of a rate on a checking account these days.

It looks like you're looking at this bank, and I can see they have a few more requirements that seem a little tedious:

  • Complete at least 12 Debit/Check Card Point-of-Sale purchases (transactions must be made without using your Personal Identification Number, or PIN, to count towards the minimum of 12 and must post and clear your account on or before the last day of the calendar month)
  • Each calendar month, one direct deposit OR one ACH debit OR pay one bill when using Consumers Credit Union’s free online bill payment system, must post and clear your account on or before the last day of the calendar month
  • Access Online Banking at least once each calendar month

If you don't do these things every month, then you lose the great interest rate. If you can think of an easy way to jump through these hoops and not forget, then it's probably worth it. For example, if you routinely eat out for lunch or buy a morning coffee, you can use that card to pay for it. Set yourself a recurring reminder in your calendar or smartphone to remind you to login to the online banking site.

Ultimately, since this is an emergency fund, it's a good idea to keep it nice and liquid in a checking account. You're not likely going to find many other options that will give you a better (and safe) return and still keep your funds available for when you need them. In summary, it sounds like a good idea to me so long as you think you can reliably jump through their hoops.

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It depends on how much your time is worth. Those interest rates from that amount of money will not generate anything convenient. And the effort you make to fulfill the requirements can possibly turn into an overhead cost to getting that $34 a month. For instance, lets say you make $20/hour but you spent an hour trying to figure out how their billpay works. Suddenly not worth it. And if that interest rate is only granted up to $10k, then the compounding effects will be nullified because they won't even grant that same interest rate once the money starts to grow.

Hope that helps.

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  • You are totally right, but in the other hand I have my emergency fund just doing nothing 0.49% APY or even less. Is it ok to have your emergency fund getting nothing if you are required to do nothing to keep it there? – Geo Nov 13 '11 at 21:13
  • Surely you could find a simple savings account that will give you more than half a percent yield. ING Direct comes up a lot in discussions about savings in the US (which I assume this is) and the first offer I find from them gives 0.90% with "no catches". I'm sure you can do a lot better with a little looking around, particularly if you'd be willing to put some of the money into CDs or similar. – user Nov 14 '11 at 12:12

$34/month for doing 12 transactions or more. If your time is worth less than about $2.50 per transaction, then it makes sense.

I'd also check to see what happens if you miss and make only 11 transactions one month. Do you lose a finger or something? Or (less dramatically) do they take away your nice rate forever or slap you on the wrist financially?

The fine print taketh away in these deals. I'd be sure to see what it says.

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  • Can obviously only speak about my accounts, but for us we lose the rate for the month (drops to .25% APY). If we make the transactions the next month we go back to the high rate. – Scott Nov 20 '11 at 15:01

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