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Rain or Shine: Emergency Funds for Rainy Days

a man check's his emergency fund's balance using mobile banking

Have you ever heard the saying, "saving for a rainy day"? Well, we are here to help you do just that! Building up your emergency fund is essential for the unexpected twists thrown your way. But with so many savings options out there, it can feel overwhelming. Don't worry, though; we have your back. In this guide, we will compare standard savings accounts, certificates of deposit, and money market accounts for emergencies. Together, let's choose the perfect option to weather any storm!

Savings Accounts for Emergencies

Savings accounts are an ideal choice for building rainy day funds due to their low risk and liquidity. They provide a straightforward way to save money while offering easy access whenever needed.

Insured by the FDIC for added security, these accounts usually have low minimum balance requirements, which makes them affordable for most people. However, they often come with lower interest rates compared to other investments, potentially resulting in slower growth.

Furthermore, inflation poses a risk of reducing the value of your savings over time, and fees may also apply depending on the bank or account type. Therefore, while standard savings accounts are convenient for rainy day funds, they may not earn a lot interest or experience substantial growth.

Certificates of Deposit for Emergencies

Essentially, a certificate of deposit (CD) is like a time capsule for your money, offering a fixed interest rate for a set period of time. CDs provide a simple way to boost your savings while avoiding the complexities of the stock market, where fluctuations and constant monitoring are common.

While CDs are secure, FDIC insured, and offer high returns, they may not be suitable for emergencies due to their limited liquidity and penalties for making early withdrawals. However, allocating a small portion of your emergency savings to CDs—specifically short-term CDs or CD ladders—can help you continue to grow your savings while maintaining accessibility.

Money Markets for Emergencies

A money market account functions similarly to a regular deposit account but offers higher interest rates, providing a safe place to store funds while allowing them to grow faster. It combines the flexibility and liquidity of a savings account with the higher interest rates of certificates of deposit, making it an effective option for short-term savings goals.

With FDIC insurance, money market accounts are more dependable and accessible than stocks, but their returns may be lower as a trade-off. They also typically have limitations on transactions (6 per month) and higher minimum balance requirements than those of standard savings accounts.

Additionally, during periods of high inflation, the returns on money market accounts may not keep up. This could potentially diminish the purchasing power of your savings over time. Despite these drawbacks, money market accounts can still be a stable choice for those seeking a secure and relatively low-risk investment option for emergency savings.

Saving for a Rainy Day

When it comes to saving money for emergencies, it is important to choose a method that fits your needs. Be sure to consider opening deposit requirements, potential for growth, and liquidity in times of need. To achieve this, we recommend researching different financial institutions and products to find a savings option that suites your goals.

For your emergency savings, it is smart to keep the majority of the funds in a money market or standard savings account. This should cover roughly 3-6 months of living expenses and be within reach in case of unexpected events like job loss or medical emergencies. Taking it a step further, you should also allocate a portion of that money to an account from a brick-and-mortar bank. This ensures immediate access to your funds, a crucial advantage over online banks, which may take 1-2 business days to process transactions.

Accounts for Financial Emergencies at Academy Bank

Ready to explore the savings opportunities at Academy Bank? Explore our savings accounts,1 certificates of deposit,2 and money market accounts.3 All of these options are FDIC insured and tailored to meet your financial needs.

For personalized support in setting up your emergency fund, reach out to one of our friendly personal bankers for tailored financial assistance. And don't forget to utilize our Emergency Savings Calculator. It's designed to help you determine the right amount for your emergency fund and kickstart your savings journey.

Get started today!


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1 $25 minimum opening deposit required.  $100 minimum balance required to avoid $5 monthly service charge.  $5 paper statement fee applies.  Closing new accounts within 90 days of opening will result in a $20 closure fee.

2 $500 minimum deposit required. A penalty may be charged for early withdrawal. CD rates are subject to change at any time and are not guaranteed until CD is opened. Fees charged to the account could reduce earnings on the account.

3 Minimum $25 deposit to open the account. A monthly service charge of $10 will be imposed every month or statement period if the balance in the account falls below $1,000 on any day of the month or statement period. Six (6) transactions per statement allowed. Excessive withdrawal fee of $10 per item over 6 withdrawals per statement cycle. Free eStatements or $5 paper statement monthly fee. Closing your account within 90 days of opening will result in a $20 early closure fee.