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It is what it is (thelemmy.club)
submitted 3 months ago by to c/programmer_humor@programming.dev
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[–] 1 point 3 months ago (5 children)

There are Money Market and similar accounts which act like checking accounts but have interest rates like high yield savings accounts. They typically have a minimum balance of like $5k or more so if you have a large sum of money flowing through the account each month you can still get the yields but an unexpected pileup of bills out of order doesn't cause declined transactions

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  • [–] 1 point 3 months ago* (4 children)

    Yup, I was thinking along the lines of a money market savings account. They're perfect for emergency savings funds because there's no restrictions on withdrawals like with a CD. If you go below the threshold then you don't get the higher yield, but that only happens in an emergency when you need to draw from it.

    I usually keep enough for my recurring expenses in my checking account, so auto-pay goes through without any overdrafts. I keep a little on top of that for discretionary spending and move the rest to savings.

    That's why I said I would never have $15K in checking at one time. Just seems like bad money management.

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  • [–] 1 point 3 months ago (3 children)

    They’re perfect for emergency savings funds because there’s no restrictions on withdrawals like with a CD.

    It's funny you say that! I've started putting some of my emergency fund into CDs. It's just a $20 fee to withdraw early, and its more than $20 in extra interest compared to the HYSA by having it in a CD so it maths out

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  • [–] 1 point 3 months ago (2 children)

    I've heard of some people doing multiple CDs with a staggered start so that once they start maturing, one matures every 3 months or so.

    It sounds like a good idea, and it's more liquid than putting it all in one CD, but I'd still be concerned with an emergency hitting just after rolling over one of the CDs and not having three months to wait for the next one.

    If you don't mind the penalty for early withdrawal then I guess it's fine, but I thought some make you forfeit the interest accrued?

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  • [–] 2 points 3 months ago (1 child)

    If you don’t mind the penalty for early withdrawal then I guess it’s fine, but I thought some make you forfeit the interest accrued?

    I believe this is correct. Personally I keep half of my emergency fund in my HYSA and the other half in CDs, with the thinking being that 95% of the time I won't have to touch any of it, then in a big enough emergency I'll have the funds in the HYSA, my checking buffer and my (traditional) savings buffer to lean on first while I sort out the financial specifics for the rest of the emergency. And the extra couple hundred bucks a year the CDs earn over the HYSE should make up for any losses if I do ever have to break one early

    Any emergency that costs enough to hit the HYSE is going to be the kind of emergency where you can take the time to figure out the best financial path forwards, maybe even negotiate totals or buy time with a good faith partial payment

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