• http://www.wealthinformatics.com/ Suba

    And it is generally safe. No worries losing money in a flood/fire/theft. That itself will be stressful and losing the money saved exactly for these type of emergencies will be even more devastating. Also some CDs like the Ally bank 5 year CD pays more and if you break the CD before 5 years you will lose only 3 months interest. That works out to be much better than the 0.1% big banks are giving.

    • http://www.dollarversity.com Eric J. Nisall

      You said it Suba, there’s absolutely no security in holding cash physically. Plus, some CDs, like the Ally Raise Your Rate Cd, allow you to bump the rate during the term if interest rates get raised. And, if you do need cash out a CD early, you at least get to take the early withdrawal penalty against the earned income.

  • http://twitter.com/financialsamura Financial Samurai

    But zero is better than losing money in the markets!

    • http://www.dollarversity.com Eric J. Nisall

      You won’t get any argument from me on that one, Sam!

  • http://onecentatatime.com/ Onecentatatime

    Eric my checking accounts are interest payee. As you live in south Florida, you can open a interest payee account at Bank of Atlantic. Enjoyed the post

    • http://www.dollarversity.com Eric J. Nisall

      There are lots of checking accounts that pay interest, SB, but in order to get anything that competes with online bank accounts like Ally, Discover Bank or Everbank you need to keep a hefty amount in there at all times, which isn’t easy for many people. Bank Atlantic is a convenient place, but I can’t have an account there; I did at one point, but they closed it on me because I had too many electronic transactions.

  • http://sweatingthebigstuff.com/ Daniel

    I think you should have some money in a checking account but in this current economy, it is a far better decision to pay down your debt.

    • http://www.dollarversity.com Eric J. Nisall

      Either that or like some are suggesting (depending on age), bumping up investment funds to take advantage of the market and time. At the same time, I think it’s a huge mistake to ignore the liquid accounts entirely.

  • http://www.FSYAonline.com FinancialSuccessforYoungAdults

    Anything is better than zero but hopefully inflation won’t eat away at your savings. I think paying down debt is good right now also.

    • http://www.dollarversity.com Eric J. Nisall

      I agree, but I would also advise someone not to get too crazy and abandon saving all together. It is still a vital part of any financial plan.

  • Thefrugaltoad

    I was going to say that Money Market accounts pay a much higher rate but I was shocked to see that Vanguard Prime Money Market Fund is only averaging .06%!  I agree with the others about building a n emergency savings first and then paying down debt if at all possible.

    • http://www.dollarversity.com Eric J. Nisall

      Yeah, that’s a pretty sad rate for a historically decent source of interest. Even still, there are plenty of options to earns some decent interest while staying liquid for emergency funds and short-term needs.