So everybody knows that you need to keep a little rainy-day money set aside. An emergency fund, if you will. I currently keep $2,000 in my emergency fund, which isn’t really enough were something tragic to happen like the loss of a job, but it’s enough to cover if the fridge goes down while I’m working at getting out of debt. My bank offers savings accounts, of course, but the interest rate on that is ridiculously low. I think my money would appreciate more in mason jars buried in the back yard.
Now I do keep a little money in a savings account at my bank, about $1,000. That’s what I call my “slush fund.” Because some of my income is intermittent, like my writing revenue, I keep a little in Wachovia savings linked to my checking account for the months when my writing income is low. Then, when I get some big payments from my writing work, I replenish my slush fund until the next slow time.
But for my emergency fund, I wanted to make a little more money. I mean, really, I won’t need to access that money immediately, I can handle a couple of days without it, and if it’s a real emergency, then I will break down and use a credit card then pay the card off with my emergency fund.
So I set up an account with HSBC Direct, an online branch of HSBC. I initially set it up there because my mortgage at the time was with HSBC and I had faith in the bank, not to mention the fact that they were offering 5.5% interest! With the drop in interest rates over the past year, that rate has fallen, but I’m still getting 3.5% interest on my savings. I have two online accounts with HSBC, one for savings that earns 3.5%, and one for online bill pay, which earns 1.5%. My car payment auto-drafts out of the bill pay account, and I just transfer money from my regular checking account into there each month. I also have a debit card for the bill pay account, so if I end up in a bind for quick cash, I can move some money from my savings into the bill pay account and withdraw with my debit card.
When we decided to refinance our house and get some cash back for new windows, I left that money in my savings account for several months until we got the work done (windows are coming next week!) to make a little more interest. In the three months that it sat there, I made almost $60 in interest, so that was a pretty good decision. So check out HSBC Direct by clicking the link on the sidebar, and make some money on your money!