The best place to build an emergency fund

From car trouble to serious medical issues, financial emergencies can be as stressful as they are unpredictable. The protection offered by an emergency fund can go a long way toward reducing that stress, provided you have one — according to a 2025 Bankrate survey, 24% of people in the US have no emergency savings at all. 

Setting up an emergency fund is always a smart financial choice, but some locations are better for keeping this money than others. Below, we will explore the optimal place to build an emergency fund that is quick to access and easy to grow.  

❌ The worst places to keep your emergency fund 

In a safe at home: Not secure 

Considering the importance of quick access, it may seem like a good idea to keep your emergency fund at home. Actually, if your emergency fund is not held at a financial institution, you miss out on several key benefits: 

• Protection: If your federally insured credit union fails, your savings are protected by NCUA insurance. If cash you keep at home is destroyed (for example, by flooding) or stolen, your losses may not have any coverage. 
• Growth: Cash you keep at home does not earn dividends. Not only will your savings not grow, but their value may shrink over time due to inflation.  
• Visibility: Using Digital Banking, you can view the balances of your UNFCU accounts at any time. Cash you keep at home may be more challenging to monitor and manage. 
• Flexibility: In an emergency, you may need to make a payment or send someone money urgently. If your emergency fund is kept at home, you will need to make a deposit (and possibly wait for some time) before transferring money. 

In a share certificate: Penalties for early withdrawals 

Share certificates are NCUA insured, earn dividends, and are simple to view and manage online. As promising as these features are, a share certificate is not the ideal place for your emergency fund.  

With share certificates, you deposit money in the account for a fixed term. If you withdraw money early, you will incur an early withdrawal penalty. An emergency that cannot wait until your certificate's term ends could mean forfeiting a significant portion of your earnings. 

While share certificates are not designed for emergencies, these accounts are an excellent choice for savings you do not need to access quickly. When you save toward other goals using share certificates, you can often earn higher dividends than with other deposit accounts. 

In a checking account: Too accessible 

Your checking account offers some of the quickest, easiest access to funds because these accounts are designed for spending. The drawback here for an emergency fund is that you can all too easily spend the money intended for emergencies. This can happen accidentally, or you may find the temptation to skim a bit difficult to resist. 

✅ The best place to keep your emergency fund: in a high-yield savings account 

So, what are the features that make an account ideal for your emergency fund? The ideal account will offer: 

• Quick access when an emergency arises  
• Separation from your spending money to discourage spending your emergency fund outside of emergencies 
• Growth over time to reduce the effects of inflation 
• Easy management online, so you can transfer money quickly and check your balance regularly 

See how UNFCU’s high-yield savings account offers all of these features. 

To ensure your emergency fund is not used for anything other than emergencies, consider keeping the money in a separate high-yield savings account of its own. This way, your balance will be easy to monitor.