High Interest Checking for Emergency Funds

[trueson1]

Anyone using High Interest Checking accounts to stash emergency funds?

I found a couple - 2.5 and 3% interest with max 15 and 25K balance, need 10-12 debits and one external deposit per month. Working pretty good for me.

 

[pb4uski]

I don't but my old credit union recently merged with a bigger credit union and I noticed that my new checking account pays 2% on the first $10k of balance so I'll make sure that I have at least $10k in there at all times.

 

[braumeister]

need 10-12 debits and one external deposit per month.

Too many hoops to jump through for me. I used to have one that only needed four debit transactions per month. When they raised it to 12 I stopped.

 

[Sunset]

I don't go for those, as I don't make debit purchases, just CC or cash.

 

[mrfeh]

I don't go for those, as I don't make debit purchases, just CC or cash.

+1 I'm not gonna jump through hoops.

Primary EF: Ally savings account. Secondary: I Bonds, CDs.

 

[jazz4cash]

Anyone using High Interest Checking accounts to stash emergency funds?



I found a couple - 2.5 and 3% interest with max 15 and 25K balance, need 10-12 debits and one external deposit per month. Working pretty good for me.

Does auto bill pay count toward the debit requirement?

 

[trueson1]

No. Have to be point of sale. My wife and I just use our debit at local stores (gas, groceries, fast food, starbucks, etc) and we can easily get 22 in a month for 2 different accounts. Been doing this for several years now.

 

[Spock]

For security, I don't understand why people would give anybody direct access to withdraw from their checking account with a debit card.

A credit card puts in a buffer where charges can be review and challenged if necessary... funds don't leave my checking until I specifically pay the CC bill.
With a debit, the money is gone immediately and has to be clawed back if there is a problem.

Credit cards have consumer protections that are by law, where debit cards may have the same protections, they are only a bank policy (whim), not law.

Whatever. Its your checking account.

 

[tinlizzy]

For security, I don't understand why people would give anybody direct access to withdraw from their checking account with a debit card.

A credit card puts in a buffer where charges can be review and challenged if necessary... funds don't leave my checking until I specifically pay the CC bill.
With a debit, the money is gone immediately and has to be clawed back if there is a problem.

Credit cards have consumer protections that are by law, where debit cards may have the same protections, they are only a bank policy (whim), not law.

Whatever. Its your checking account.

This is how high yield checking accounts were born. It started in Europe, people began using debit as a credit to prevent fraud and theft when using just debit (which was rampant).

As it turned out the merchant must pay Visa or MasterCard a fee when the debit card is used as a credit card and in turn Visa or MC must pay the bank or credit union that issued the card part of that fee.

Financial institutions in the US can offer high yield checking because they essentially force a person the use their debit as a credit and then give us a cut of the Visa and MC fee in the form of higher interest rates.

 

[VanWinkle]

I have a local bank that pays 1.95% on up to 30,000.00 in my checking account. It does require 10 debits per month. I use it at my golf course, and local grocery store. I never use it out of my own zip code and never at an establishment I don't regularly deal with. I do keep 30,000.00 in the account as my cash living account for 6-10 months.

VW

 

[trueson1]

The key is to never use it as a debit - always use as a credit withdrawal (never enter your pin). This way it is processed as a credit and you are not liable if something goes awry. Still best to only use in places you know.