Reply to Early thirtysomethings how much is in your checking account?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Why are people keeping an emergency fund in checking? Smh[/quote]
Why not?[/quote]

Because it's just throwing money away.  Checking accounts get no interest at all.  Even though small, savings accounts get a small interest.  Money markets get more.  Have the money direct deposited to your savings account.  Transfer what you need to pay bills to the checking account when needed.  The interest is small, but it builds up slowly and compounds.  $20 this year is $25 next year is $37 the next year and compounds.  Over the years, it will matter.[/quote]
There is no money market or high yield savings account on earth that compounds from $20 to $25 in one year.  That would be a 25% return.  Ally and American Express currently offer high yield savings accounts at 2% annually, so it's more like $20 to $20.40.

I agree that people should put their money in one of these accounts if possible--it's free money--but it's not quite at the scale you suggest.  The rates also fluctuate; both Ally and AE were down closer to 1% this time last year.  Same story with most money market accounts.[/quote]

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