Getting More From My Emergency Fund With 3% and 5% Interest Savings Accounts

A strategy that I’ve used over the past five years or so is to take advantage of what you could call “mega high-yield savings accounts.” While your typical high-yield savings account pays 1% interest or less, mega high-yield savings accounts are savings accounts that pay much more – as much as 3-5% interest. This is money held in an FDIC-insured savings account as well, which means there’s no risk in keeping your money in these accounts.

The downside of these 3-5% interest savings accounts is that there are often limitations or hoops you have to jump through to get these accounts fully set up. For example:

• All of these accounts limit how much you can earn at that mega high-yield interest rate. You’ll typically be able to earn 5% interest on up to $500 or $1,000 for each savings account. There are enough of these accounts that you can open up multiple accounts earning these rates, which allows you to earn mega high-yield rates on more significant sums.
• Some of these mega high-yield savings accounts require more set-up work compared to others. For instance, some of these accounts require more involved work to get them open. Others require you to automate certain transactions to keep the accounts fee-free. That said, it isn’t that much work, especially once you have everything set up and automated, but it is some work nonetheless. 

For me, taking advantage of these 3-5% interest savings accounts makes a lot of sense. I generally earmark these funds for my emergency fund or for more short-term goals where I can’t risk any loss (a house downpayment fund, for example). Here’s how my emergency fund is divided up, for instance: 

I currently have over $37,000 that I earmark as an emergency fund. $17,000 of it earns 5% or more interest. The rest of it earns 3% interest. It’s a big emergency fund, but it’s also money that is earning a rate of return that beats inflation. When you think about it, these accounts allow me to get the best of all worlds – I get the safety of a savings account while also getting a high rate of return.

I have an admittedly more complicated money system compared to most people. It works for me because I find doing this stuff interesting, especially once I get everything automated. For some people, having this many different accounts might seem more complicated than it’s worth. I just think of these accounts as just one big pool of accounts. Most require a little bit of setup, but once they’re done, they all run themselves. 

I’ve continued to modify my 3-5% accounts as different accounts fade out or as I learn about new ones. In this post, I’ll be listing all of the 3-5% interest accounts I know about that don’t require a ton of work to maintain. That means this list only includes mega high-yield accounts that can be automated and don’t require you to do a lot of manual transactions each month.

List of 5% Interest Accounts

Here’s a list of all the 5% interest accounts I use, organized from the easiest, most straightforward to use, to the ones that require the most work to set up. 

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Digital Federal Credit Union (6.17% Interest On Your First $1,000). Digital Federal Credit Union (DCU) is probably the easiest mega high-yield bank account to set up. The savings account offers 6.17% interest on your first $1,000 (everything above $1,000 earns 0.25% interest). If you have two people in your household, you’ll be able to open up an account for both people, allowing you to put away $2,000 at 6.17% interest. 

The DCU savings account has no monthly fees, so this is an easy set it and forget it account. The minimum balance is $5, so you’ll notice that your “available balance” will always be minus $5 since you have to leave $5 in the account to keep it open.  

Interest is paid monthly, so at the beginning of each month, I log into my DCU account and pull the interest I earned back into my regular savings account. You don’t have to do this, but it’s just something I’ve gotten into the habit of doing each month. 

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Service Credit Union (5% Interest On Your First 0). Service Credit Union has a savings account that earns 5% interest on your first $500. The savings account has no fees, so this is an easy account you can open and use to park some of your emergency fund. Interest is paid monthly, so I pull the interest out at the beginning of each new month.

In addition, Service Credit Union is currently offering a $75 signup bonus if you sign up for the promotion via a referral link. To earn the bonus, you have to do the following: 

1. Register for the $75 referral promotion using a referral link (here’s my referral link).
2. Open a checking account with Service Credit Union (I recommend opening the Everyday Checking Account).
3. Have direct deposit of net pay of at least $500 per month into the new checking account.
4. Account must be open and in good standing for a minimum of 90 days.
5. Referee must enroll in e-communications.
6. The $75 bonus will be deposited to the checking account of both the referee and referrer 120 days after the referee’s account is opened as long as all criteria met.

Service Credit Union has some membership requirements in order to join, but they’re easily met. Follow the below steps to open your Service Credit Union Account.

1. First, you need to join the American Consumer Council (ACC). Go to the ACC membership website here to get your membership. Enter the code “consumer” in the membership code section for your free membership (if that doesn’t work, try entering the code “service”). You’ll then get an email with your membership certificate.
2. After getting your ACC membership, go to the Service Credit Union website here, click the “Open Now” box, and then click “New Member Account.” 
3. Under “Select Your Eligibility,” click the box that says you are a member of the American Consumer Council. Then enter your ACC membership number found on the membership certificate that was emailed to you. 
4. Under required products, choose Primary Savings.
5. On the final application page, you can upload documents before submitting your application. The documents you’ll want to upload are your ACC membership certificate, a picture of the front and back of your driver’s license, and something to verify your address, such as a utility bill or home insurance policy. You don’t have to do all of this at this point in the application, but if you don’t, you will receive an email from someone at Service Credit Union asking you to send them this information before your account can be approved. 
6. Even if you upload all of the required documents, you may get an email from the membership department asking you to send them these documents. Just keep an eye out for this email and send the documents again if you do receive this email.
7. Once approved, you’ll get a welcome email with your member number. To set up online access, go back to the main Service Credit Union website and sign up for online banking. To sign up, you’ll need your member number and your “Call 24” pin. Your pin number is the last four digits of your SSN. Once you enter this info, you’ll be able to set up your username and password to access online banking. 

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Netspend Accounts (5% Interest On Your First $1,000; Can Open Five Accounts Per Person). I’ve written extensively about Netspend in this post: Netspend Account: The Ultimate Guide to a 5% Interest Savings Account. You’ll want to read this post carefully if you’re interested in taking advantage of these accounts.

The short of it is that these are prepaid debit cards that offer an FDIC insured savings account that earns 5% interest on the first $1,000 in each account. You can have a total of 5 different Netspend accounts, so that means each individual can have up to $5,000 earning 5% interest. Interest is paid quarterly, so at the beginning of each quarter, I withdraw all of my earned interest back into my regular high-yield savings account.

The catch with these accounts is they require doing a little bit of research so that you understand how to use these accounts. The post I wrote is long – over 5,000 words. But if this is something you are at all interested in, you’ll want to read through all of it carefully. Netspend can have a lot of hidden fees, but these are all easily avoided with some simple automation. So long as you follow the steps outlined in that post, you’ll never pay any fees. I’ve had my Netspend accounts open for over 5 years now and have never had any issues.  

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H-E-B Debit Account (6% Interest On The First $2,000). The H-E-B Debit Account is a separate product from the H-E-B Prepaid Netspend account. This means that it’s possible to have both the H-E-B Debit Account and the H-E-B Netspend account. 

This account was a bit weird. I was initially able to open it without issue but then found my account was closed the next day. I figured it was because I already had 5 Netspend accounts and that you couldn’t get the H-E-B Debit account as a result. 

Strangely, however, a few months later, I received an email stating that my account had been closed in error and that it was now reopened and I was even getting a $50 bonus as a courtesy. My wife received the same email on her account. I have no idea what happened, but I’m not complaining. 

After my account was reopened, I transferred $2,000 over to it, activated the savings account, and moved the money into that. My wife and I now have $2,000 each earning 6% interest. 

Related: The H-E-B Debit Card 6% Interest Savings Account. 

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Other 5% Interest Accounts. If you take advantage of the above savings accounts, you’ll have $8,500 set aside earning 5% or more interest. You’ll be in an even better situation with a two-person household – that’ll put you at $17,000 earning 5% or more interest. I think that’s a good emergency fund for most people.

Depending on your situation, you may be able to take advantage of a few more 5% interest accounts. These accounts have some limitations or requirements that make them unavailable to everyone. Here are some additional 5% interest accounts you may be able to use:

Blue Federal Credit Union (5% Interest On Your First $1,000). Blue Federal Credit Union has a savings account that offers 5% interest on up to $1,000. The downside is that you cannot have your balance go above $1,000 on this account, so it requires a bit more monitoring. In addition, Blue Federal Credit Union seems to be very sensitive when approving new accounts. My understanding is that this account is more hassle than it’s worth.

T-Mobile Money (4% Interest On Your First $3,000; Must Be A T-Mobile Customer). This account offers 4% interest on up to $3,000. There are transaction requirements, however, and you have to be a T-Mobile customer to qualify for this account. Check the requirements to see if it makes sense for your situation. 

List of 3% Interest Accounts 

If you’ve maxed out your 5% accounts, you’ll need to move onto 3% interest savings accounts. Luckily, you have a lot of options here for 3% interest accounts that don’t require a lot of work to maintain.

Here’s a list of the 3% interest savings accounts I’ve used, starting with the easiest ones to set up. 

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Current (4% Interest On Up to $6,000). Current is a fintech banking app that offers a savings account that pays 4% interest on up to $2,000. The premium plan used to cost money, but now is free. If you have the premium plan, you can open three savings accounts per person. That means you can put away $6,000 earning 4% interest. Here’s a post I wrote that gives you more info on Current and how it works: Current Bank App – 4% Interest Savings Account On Up To $2,000.

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Service Credit Union (3% Interest On Up to $3,000).  In addition to the 5% interest account mentioned previously, Service Credit Union also has a savings account called the Holiday Club Account. This account has no fees and offers 3% interest on your first $3,000. My recommendation is that when you open the 5% Rainy Day Savings account, you should also open the 3% Holiday Club Account as well.  

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Workers Credit Union (3.56% Interest On Up to $1,000).  Workers Credit Union is a federal credit union based in Massachusetts. Their SaveUp Savings account offers 3.56% interest on up to $1,000. That makes Workers Credit Union a good location to store additional emergency savings.

Note that Workers Credit Union has a weird fee schedule. They charge an inactivity fee if you have no debits or credits within 365 days. This shouldn’t be a problem for most people since you can simply withdraw the interest at least once per year to avoid this fee. 

In addition, Workers Credit Union also has fees if you do ACH transfers from the Workers Credit Union website. To avoid this, make sure to initiate any ACH pushes or withdrawals from an external bank account.

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HMBradley (3% Interest On Up To $100,000). HMBradley is a fintech bank that offers 3% interest on up to $100,000. To qualify for the 3% interest, you have to do the following: 

1. Have a real direct deposit of any amount go into the account each month; and
2. Save at least 20% of your deposits that go into your HMBradley account each quarter.

If you do both of those things, you’ll qualify for the 3% interest for the next quarter. Note that the interest is paid monthly, but the qualifications are determined on a quarterly basis. That means if you meet the requirements in Q1, you’ll earn the 3% interest rate on your funds in Q2, and so on. 

The thing that confuses most people about this account is the requirement to save 20% of your deposits. Basically, think of it this way. Add up everything that goes into your HMBradley account for the quarter. You can withdraw up to 80% of your deposits in that quarter and still qualify for the 3% interest rate for the next quarter. For example, if you deposited $10,000 in a quarter, you can withdraw $8,000 and you’ll still qualify for the 3% interest rate next quarter. Here’s an FAQ from HMBradley that explains in greater detail how to earn the 3% interest rate.

Right now, I use HMBradley for part of my emergency fund. I’m also using it as a place to hold my house downpayment fund. I think if you’re saving for something big like a house downpayment, HMBradley makes a lot of sense. You’ll earn a high-interest rate on money that would otherwise be doing nothing. And when you’re ready, you can just pull all your money out. 

Unfortunately, HMBradley recently moved to an invite-only model. I’m out of referrals, so you’ll need to get a referral from someone who has referrals to give out. If you’d like to leave your referral in the comments, feel free to do so. 

Update: HMBradley has moved to a new model where you can only earn the 3% interest if you open an HMBradley credit card and meet certain requirements (spend $100 on the credit card per month and have a direct deposit of $2,500 per month). While some people might be able to meet these requirements, for most, these new requirements effectively destroy HMBradley as a useful high-yield savings account. I’ve opted to move much of the money I have in HMBradley into I Bonds (more info about I Bonds can be found here).

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Final Thoughts 

At the moment, I have over $37,000 that is earmarked as my emergency fund. $17,000 is divided between multiple 5% interest accounts. The remaining is earning 3-4% interest with Current, Service Credit Union, and Workers Credit Union. 

Taking advantage of these mega high-yield accounts isn’t for everyone. It admittedly adds a layer of complexity that might not make sense for you. But if you’re someone looking to get the best of all worlds when it comes to your emergency fund, these are the accounts you can use. 

For additional information, be sure to check out my post, Where To Get 5% Interest Savings Accounts, where I walk through how I’m maximizing my emergency fund.

Additional Notes: I’ve had a lot of people ask about how safe your money is with HMBradley and these other fintech banks, especially given what recently happened with Beam. I personally feel comfortable with HMBradley for a variety of reasons, but of course, you’ll have to make your own decisions given your comfort level. Jonathan over at MyMoneyBlog wrote a good article with his thoughts about why he’s comfortable with HMBradley and why Beam was likely a unique situation. Worth a read if you’re looking for more info.