Many people here use a HYSA to store their emergency fund. But I'd like to talk about how you pull the money out if you actually have an emergency.
Usually online only banks have the highest rates. But let's say you have a $25k emergency (need a new roof, car suddenly dies, etc…) – you would just do an ACH online transfer to your primary bank and would be ok with waiting a few days for the transfer to complete right? Or I guess if it's at another physical bank then you could go get a cashier's check made out to yourself and then deposit it in your other bank.
Or is your HYSA also at the same bank where you have your primary day to day checking account?
You're very unlikely to have an emergency with that kind of price tag and not have a few days to transfer the money right? I'm assuming that for a smaller emergency like a $1k car repair then you just keep a certain amount in your day to day checking account so that you would only need the HYSA for "big" emergencies.
Just curious how y'all handle this dynamic. Thanks!
Using your HYSA for an emergency
byu/Celcius_87 inpersonalfinance
Posted by Celcius_87
20 Comments
I have over 100k in open CC limits..
So I can withstand a few days to transfer money between accounts.
HYSA in online bank. Checking in local Federal Credit Union. ACH transfer for free from online to FCU and money is available in less than 3 days. This has met my needs so far.
My emergency fund is smaller than my credit card limit. I’ll pay with a credit card and then pay it off. If it is above that, I’ll setup a payment plan.
I don’t envision any scenario where you need cash same day. I also don’t see one where I can’t just transfer/wire from a HYSA or put it on a credit card.
I interpret having cash available simply as having access to something I can liquidate within a week without worrying about current market conditions.
Checking in a big bank. Emergency in an online HYSA. For immediate cash emergencies (like say <$2k), I have about 2 months of mortgage payments as buffer in my checking, so there’s the cash there. For anything larger than that (like a vet bill), it can usually be paid with credit cards. Beyond that, you are very unlikely to need it right away, so transfers between online HYSA to checking is more than enough.
My emergency fund is at the same bank as my checking account. I never considered another setup honestly
This is how I handle emergencies, put it on my credit card, then transfer enough from HYSA to checking account to pay off the balance. So now I got extra points by using my credit card and I can relax about using the cash to pay that said emergency.
I would pay for the emergency on a credit card. Then I’d have over a month to transfer money, if I needed to do that. However, I use the Fidelity Cash Management account, so I probably wouldn’t need to do much transferring anyway.
Correct. As long as you can access within a few days, you’re fine, especially if you have plenty of credit if you need it before then.
Rarely do an emergency require money right now. There’s almost always a few days.
The easiest is putting the expense on a credit card. Transfer the money and pay the credit card, quick enough, and there’s no or minimal interest.
I don’t mind waiting a couple of days for my EF money if I needed to. I am most likely to put whatever it is on my credit card anyway, then use my EF money to pay it off. Or if one of us lost our job and we needed the EF for living expenses, then a couple of days wait won’t make any difference.
As a side note – I wouldn’t consider a $1K car repair as an emergency. Although you can’t predict when car repairs will have to be done, you know they are part of car ownership, so they are something that you know will occur. I think that a sinking fund is a better choice for that kind of thing. We keep a separate pot of money for car repairs, home maintenance, and that kind of thing. You can keep it in the same account as your EF if you are disciplined about it, but I don’t think that money that is earmarked for emergencies should be touched for anything other than an emergency.
LendingClub has a debit card account that I also opened. Transfers are instant.
If given enough warning, I’d open a 0% interest credit card and put it on that. No warning, and I’d just stick it on one of my existing credit cards. Then move the money out of the HYSA a few days before scheduling the credit card payment from my checking account.
If I needed cash for bail or something, then it’d be down to daily ATM limits more than anything, which would always be a problem.
I can withdraw cash from my online bank at any ATM. If the emergency accepts cash, check or credit, the first two come straight out of my online bank. The last I use bill pay from my online bank to pay off the credit card. My online bank is my primary bank.
The only emergency where you need such quick access to large amounts of cash is a scam anyways. I can’t think of any emergency situation where a simple credit card would not suffice to tie you over the few days for ACH to process. But just to reiterate if you find yourself in such a dire emergency you need access right that second, stop and take a minute, have a cup of coffee or tea, and start researching common scams related to that situation. Urgency is a red flag
My HYSA is a money market account with check writing privileges. But most likely I’d pay it with a CC and then pay that off.
Primary checking account with a local bank. Free checking account and HYSA online. If I need access faster than I can transfer to my primary checking account, I can do an instant transfer to the online checking account.
Realistically, I would probably use my credit card and/or personal line of credit at my primary bank first if needed, then replenish from the emergency fund.
Depending on who you bank with you could consider a wire transfer. Fidelity is free and Bank of America used to be $10, not sure if it’s still the case. If you have a medical, car, or house repair emergency you should be able to pay with a credit card then pay the CC with the eFund.
I keep my hysa in a separate bank but transfers process in a day. Worst case ill throw it on a CC and take care of it later.
I have a free checking account at the same bank as the online savings account with a balance of less than $10. I also have one book of checks. In an emergency, I can instantly transfer money to the checking account and write a check out of it. It’s free, but i have NEVER used it. I’ve always just waited the 1-2 days for the money to transfer to my external account.
Amex is nearly the next day every time and when I had to do an ACH payment for a house, it was the easiest ACH process I’ve ever done.