Interest Earned on Emergency Fund

[OnBoard]

What do you do with the interest earned on your emergency fund?

Like many of you, my emergency fund is with Ally. Should I let it accumulate while expenses remain constant, or should I invest according to AA?

[PS241]

I leave it in and figure it's a (slight) hedge against inflation.

[livesoft]

I take all 4 cents of it and buy shares in Vanguard Total Stock Market Index unless I lose it in the couch cushions first.

[momar]

Your expenses are at least partially tied to inflation. If you maintain an EF to cover X months of expenses, then you need to add to your EF every month. Probably beyond whatever interest you are getting.

[tylerdurden]

I move the earned interest into my regular checking account every few months. The saving account is only making 0.85%, so there isn't much accumulation.

[Texas hold em71]

I move it to checking.

I reassess my EF periodically and have seen no inflationary reason to grow it over the last three years.

[mike143]

My emergency funds is invested so I let it grow.

[Shaudius]

Why not keep the emergency fund in a rewards checking account. It doesn't seem like too much trouble to make 10 transactions a month in exchange for some extra interest. I don't see the point in keeping money in something that's no better, and gains less interest.

[redhounds]

Why not keep the emergency fund in a rewards checking account. It doesn't seem like too much trouble to make 10 transactions a month in exchange for some extra interest. I don't see the point in keeping money in something that's no better, and gains less interest.

I agree that it's worth the trouble, but with most of the reward checking accounts having a fairly low amount that they pay the higher interest rate on, the extra interest isn't exactly a windfall. My reward checking pays the higher interest rate on the first $25,000 and then only 0.1% on any additional money in the account. I try to keep my average balance right at $25,000 and keep any additional cash in an online savings account like ING, Smartypig, etc. or invested per my IPS.