Do You Split Up Your Emergency Fund?

[SavingSteve]

As my emergency fund grows larger I wonder if it might be a good idea to split it between two different banks. Just in case of problems. Do any of you do that?

Right now it's in an FDIC insured online bank. But if something went wrong with the first bank or I had trouble getting the money out in an emergency, I could just use the second account instead.

Thoughts?

[creditcardfree]

If you are under the limit I wouldn't worry about it. The odds are pretty low that you would have an issue. No big deal if you do want to divide it.

We do have ours split though but not for the reason you are worried about. We have CDs at one bank with some money because the interest rates are higher. The remainder is in a money market at another bank.

[snafu]

I move the EF or segments of it every time a financial institution offers a bonus for opening a new account. If they give $ 200. - $300. for opening an account.

Have you ever had an emergency when you needed a significant amount of cash immediately?

[Fishindude77]

I know there are some good deals out there with online banks, but it's not for me. I take comfort in doing business with my locally owned, hometown bank. An actual bricks and mortar building with people. Keep my savings there, do my banking there and know the people there. I have relationships with those people, credit set up, and if i need money fast I can get it without a lengthy application process.

Apologize for side tracking the thread a bit, but I think there are some real positives in developing a relationship with some individuals at your local home town bank. And they are FDIC insured also.

[disneysteve]

Right now it's in an FDIC insured online bank. But if something went wrong with the first bank or I had trouble getting the money out in an emergency, I could just use the second account instead.

Thoughts?

As long as they are insured, there is really no chance of this happening. Nothing wrong with splitting it up but it isn't necessary. If the bank fails, it could take a few days to get your money, but that shouldn't be an issue. Just charge whatever you need to buy on your credit card and by the time the bill comes (or before most likely) you'd have access to your account again to pay the bill.

[MonkeyMama]

Yes, we keep our money spread across different financial institutions.

[Petunia 100]

I keep a small savings account at my brick and mortar bank for immediate access, and the bulk in an online savings account.

[corn18]

I move the EF or segments of it every time a financial institution offers a bonus for opening a new account. If they give $ 200. - $300. for opening an account.

Have you ever had an emergency when you needed a significant amount of cash immediately?

I like that idea.

[rennigade]

less accounts = less headaches

Investors need to start taking a simplified approach to investing. The more accounts/stuff you have the harder it is to manage/stay on track.

If you frequent bogleheads you'll learn pretty quick that less is more! And a lot of members over there have multi million $$ portfolios.

[HappySaver]

Yes. And online banks are also not for me.

[AlexM1359]

I would rather diversify my investments rather than my banks.

[scfr]

I'm in favor of keeping funds at more than one financial institution. There is no guarantee of immediate access to funds in the event of a bank failure.

https://www.fdic.gov/consumers/banking/facts/payment.html

[disneysteve]

There is no guarantee of immediate access to funds in the event of a bank failure.\

True, but that link says, "It is the FDIC's goal to make deposit insurance payments within two business day of the failure of the insured institution." I realize it could take longer but 2-3 days is pretty typical historically. If you have a credit card, a bank failure shouldn't really be an issue.

[SavingSteve]

If you have a credit card, a bank failure shouldn't really be an issue.

While this makes sense and sounds reasonable, I'm really not comfortable using my credit card in anticipation of receiving money, especially in an emergency. I only want to use my CC for rewards and things if I already have the money. I've had a rough time with CC's and I'm sensitive to carrying a balance at all. Steve you seem like someone who's never carried a balance on your cards. For me with my history of big balances, I am terrified of having a balance and getting charged interest if something goes wrong.

I like the idea of opening the account to receive a bonus so Im going to wait and see if an opportunity pops up!

[Petunia 100]

less accounts = less headaches

Investors need to start taking a simplified approach to investing. The more accounts/stuff you have the harder it is to manage/stay on track.

If you frequent bogleheads you'll learn pretty quick that less is more! And a lot of members over there have multi million $$ portfolios.

Do you invest your emergency fund? You don't keep some amount in cash or cash equivalents?