Where Should You Put Your Emergency Fund?

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My husband is currently a yearly contract employee.  We’re hoping that one day he’ll be a tenure-track employee where he’ll have more security, but due to funding, that hasn’t happened yet.  Because we feel a bit of instability from his job and we’re far from family, we’ve decided to aggressively add to our emergency fund.  The plan is to get at least three months of expenses in our emergency fund.

However, we don’t want that money just sitting in our checking account because it would be too easy to spend.  But, we don’t want it locked away in an investment in case we need it immediately if he loses his job.

We’ve made a list of requirements for storing this money as we continue to add to the emergency fund.  (It’s small right now, so we plan to grow it little by little every month, but we want our plan in place as we continue to add money.)

Out of Sight but Accessible

We don’t want this money mixed in with our regular monthly income because, well, out of sight, out of mind.  We want it in a bank separate from our regular bank (or at least our regular checking and savings account) so we don’t spend it.

No Fees

We must have an account that doesn’t charge fees.  What’s the point of saving money for a major emergency if the money gets eaten, little by little, by fees?  One account that we’re considering is the Radius Hybrid Checking because there are no monthly maintenance fees or ATM fees.  That means our money would be in a separate account, easily accessible, without fees consuming our savings.  Win!

Earn Some Interest

Lastly, we’re looking for an account that pays some interest.  I know we won’t earn a lot of interest in a regular checking account, but we’d like to earn some interest for our emergency fund.  Again, the Radius Hybrid Checking fits the bill because it pays 0.85% APY on balances over $2,500.  We’re not at that amount yet, but we definitely will be when we have three months of expenses paid.

Do you have an ample emergency fund?  If so, where do you keep the money?  Which bank do you use?  We’re just in the beginning stages of a search for the perfect bank, so I’d appreciate hearing your thoughts and experiences!