keep emergency cash at local bank?

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go_mets
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keep emergency cash at local bank?

Post by go_mets » Thu May 07, 2020 8:57 am

I have my checking account with a brick and mortar bank.

I also keep $5K for emergencies at another brick and mortar bank.
The bank had a tolerable 1.15% interest rate for $5K+ deposit.
They recently dropped the interest rate to 0.15%

Am I being irrational for wanting to keep $5K for easy access just because?

I know I can access cash from ATM with cash advance through my credit cards,
but frankly I am not 100% certain that the PINs I have for them would work or that I even have PINs for them.

.

7eight9
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Re: keep emergency cash at local bank?

Post by 7eight9 » Thu May 07, 2020 9:00 am

At 0.15% you are only getting $7.50 interest on your $5,000. In my opinion you might as well keep the cash at home and have immediate access to it.
I guess it all could be much worse. | They could be warming up my hearse.

carolinaman
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Re: keep emergency cash at local bank?

Post by carolinaman » Thu May 07, 2020 9:03 am

I usually keep several thousand dollars in my checking account above what I need for monthly expenses, even though I have overdraft protection.

I can quickly transfer funds from Vanguard if needed or tap HELOC for emergency needs. I get virtually no interest on the extra cash in my checking account but that is pretty insignificant to me.

I think the key is to have quick access to cash from one or more sources with the certainty it would be available as needed. You decide the source of the emergency funds. YMMV

huskerfan1414
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Re: keep emergency cash at local bank?

Post by huskerfan1414 » Thu May 07, 2020 9:05 am

I'm sure it's a matter of personal preference. But I agree with your feelings that you should have some in a local brick and mortar bank. I think having at least 1-3 months of your emergency fund in a local bank that you can access within the hour is wise. It can also operate as your "hub", where you transfer money from to other accounts.

After the 1 month or more is in the local bank, then you put the rest of your emergency fund in online high yield accounts/CDs, etc.

That's how I handle it, anyway.
The more I learn, the dumber I feel.

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whodidntante
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Re: keep emergency cash at local bank?

Post by whodidntante » Thu May 07, 2020 9:11 am

You can also do a cash advance on a debit card tied to an online account. That is much less expensive than a credit card, and is sometimes free of charge. You can pull thousands like that. The only downside is you need a teller to do that, not an ATM. It would be tough to get it done on a Sunday or a holiday.

What's the 5 grand for?

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8foot7
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Re: keep emergency cash at local bank?

Post by 8foot7 » Thu May 07, 2020 9:23 am

Even at double your previous yield, on 5k in absolute terms you are talking a return of just over $100 a year, or less than $10/mo.

You were receiving about half that before, or less than $5/mo.

At some point you have to confront the diminishing returns of trying to optimize every last nickel. I would think for most posters on this board that things that bring in or cost less than $5/mo are generally lost in the noise of the monthly budget. Even for someone bringing home just $2,000 after tax a month, $5 represents just a quarter of one percent of that amount. This has always been why I think trying to squeeze every last penny out of a relatively small amount of money is essentially a waste of time when rates are this low. (Sure, back when you could get 5% online savings accounts, then it made sense to think about this. But even at 2%, on a small balance, I just don't see the point.)

It sounds like immediate access to this money is important to you, so I would either withdraw it and store it in your house in a safe place, leave it in your checking account, or leave it where it is now and accept the paltry yield. You're giving up very little in any of those three options. Until rates start getting north of 4% you just aren't going to make any money on 5k.
Last edited by 8foot7 on Thu May 07, 2020 9:31 am, edited 1 time in total.

MathWizard
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Re: keep emergency cash at local bank?

Post by MathWizard » Thu May 07, 2020 9:29 am

No you are not being irrational. I keep more than that.
Yes, my savings is 0.15% as well.

One option is to use a CD at the bank for some or most of the money.
The interest is not great, but it is over 1% for me. The worst case is that
I pay an early withdrawal fee, forfeiting 3 months interest.

I think of this not as an EF, but just as a cash flow fund. I have paid
off my mortgage, so I do not have an escrow account. I save for lumpy expenses
like property taxes and annual house insurance there, and just transfer into checking'
when I need to. We also use the funds for vacation funds from there.

The vast bulk of my money is invested, this fund typically is under 1% of my assets,
so what I earn on it is not the issue, it is more for convenience. If we just had enough funds for
month to month, we'd feel poor, even though we have a net worth in the top 5% of the US.

hudson
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Re: keep emergency cash at local bank?

Post by hudson » Thu May 07, 2020 9:32 am

go_mets wrote:
Thu May 07, 2020 8:57 am
I have my checking account with a brick and mortar bank.

I also keep $5K for emergencies at another brick and mortar bank.
The bank had a tolerable 1.15% interest rate for $5K+ deposit.
They recently dropped the interest rate to 0.15%

Am I being irrational for wanting to keep $5K for easy access just because?

I know I can access cash from ATM with cash advance through my credit cards,
but frankly I am not 100% certain that the PINs I have for them would work or that I even have PINs for them.
.
5K for easy access is good. I do about the same. I want to be able to dump around that much in my checking account immediately with just a few mouse clicks. I gave up on having every dollar in the perfect location.

Not sure about the PINs? Test drive the PINs and make good notes.

Topic Author
go_mets
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Re: keep emergency cash at local bank?

Post by go_mets » Thu May 07, 2020 12:50 pm

I ended closing that account and moving it to the other brick and mortar bank.
The interest is also low at 0.20% but the minimum is $200 vs $5000.

.

gr7070
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Re: keep emergency cash at local bank?

Post by gr7070 » Thu May 07, 2020 12:57 pm

go_mets wrote:
Thu May 07, 2020 8:57 am
Am I being irrational for wanting to keep $5K for easy access just because?
Yes
go_mets wrote:
Thu May 07, 2020 12:50 pm
I ended closing that account and moving it to the other brick and mortar bank.
The interest is also low at 0.20% but the minimum is $200 vs $5000.
I don't see a benefit in the B&M location over an online account.

7eight9
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Re: keep emergency cash at local bank?

Post by 7eight9 » Thu May 07, 2020 1:17 pm

gr7070 wrote:
Thu May 07, 2020 12:57 pm
go_mets wrote:
Thu May 07, 2020 8:57 am
Am I being irrational for wanting to keep $5K for easy access just because?
Yes
go_mets wrote:
Thu May 07, 2020 12:50 pm
I ended closing that account and moving it to the other brick and mortar bank.
The interest is also low at 0.20% but the minimum is $200 vs $5000.
I don't see a benefit in the B&M location over an online account.
The way I see it the advantage of a B&M vs. online is that the OP will be able to access the whole $5,000 during normal banking hours. After hours the ATM limit will dictate access. In the case of the online bank the ATM limit will dictate access at all times.

If the OP wants access to $5,000 day or night then their better choice would be to have the $5,000 in cash at their residence.
I guess it all could be much worse. | They could be warming up my hearse.

Topic Author
go_mets
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Re: keep emergency cash at local bank?

Post by go_mets » Thu May 07, 2020 1:30 pm

Which online banks have ATM cards?

I have onine savings accounts with Marcus and Barclays.

mervinj7
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Re: keep emergency cash at local bank?

Post by mervinj7 » Thu May 07, 2020 1:30 pm

7eight9 wrote:
Thu May 07, 2020 1:17 pm
gr7070 wrote:
Thu May 07, 2020 12:57 pm
go_mets wrote:
Thu May 07, 2020 8:57 am
Am I being irrational for wanting to keep $5K for easy access just because?
Yes
go_mets wrote:
Thu May 07, 2020 12:50 pm
I ended closing that account and moving it to the other brick and mortar bank.
The interest is also low at 0.20% but the minimum is $200 vs $5000.
I don't see a benefit in the B&M location over an online account.
The way I see it the advantage of a B&M vs. online is that the OP will be able to access the whole $5,000 during normal banking hours. After hours the ATM limit will dictate access. In the case of the online bank the ATM limit will dictate access at all times.

If the OP wants access to $5,000 day or night then their better choice would be to have the $5,000 in cash at their residence.
Maybe I'm missing something. When does one ever need $5k in hard cash immediately within minutes outside of normal banking hours? I can't think of a single situation that's within reason.

mervinj7
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Re: keep emergency cash at local bank?

Post by mervinj7 » Thu May 07, 2020 1:32 pm

go_mets wrote:
Thu May 07, 2020 1:30 pm
Which online banks have ATM cards?

I have onine savings accounts with Marcus and Barclays.
I use Fidelity (not a bank) for it's Cash Management Account. ATM fees are refunded worldwide but most accounts are limited to $500/day cash withdrawal at ATMs.

tashnewbie
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Re: keep emergency cash at local bank?

Post by tashnewbie » Thu May 07, 2020 1:39 pm

go_mets wrote:
Thu May 07, 2020 1:30 pm
Which online banks have ATM cards?

I have onine savings accounts with Marcus and Barclays.
I think a lot of online banks have debit cards. I use Schwab and they do and refund ATM fees worldwide. Of course you're limited to ATM withdrawal limits, which I think are $500/day for me. I can't think of a reason I would ever need more than that amount in cash on short notice.

radiowave
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Re: keep emergency cash at local bank?

Post by radiowave » Thu May 07, 2020 1:51 pm

go_mets wrote:
Thu May 07, 2020 1:30 pm
Which online banks have ATM cards?

I have onine savings accounts with Marcus and Barclays.
You can still get an ATM only debit card from Bank of America.

Note, I agree with the comments above that an online bank will give you better return for your cash like Ally. Have separate checking and savings account, keep most of the cash in savings (about 1.5% which isn't too bad these days), then move cash from savings to checking as needed. No withdrawal penalty CDs are another option.
Bogleheads Wiki: https://www.bogleheads.org/wiki/Main_Page

7eight9
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Re: keep emergency cash at local bank?

Post by 7eight9 » Thu May 07, 2020 1:54 pm

mervinj7 wrote:
Thu May 07, 2020 1:30 pm
7eight9 wrote:
Thu May 07, 2020 1:17 pm
gr7070 wrote:
Thu May 07, 2020 12:57 pm
go_mets wrote:
Thu May 07, 2020 8:57 am
Am I being irrational for wanting to keep $5K for easy access just because?
Yes
go_mets wrote:
Thu May 07, 2020 12:50 pm
I ended closing that account and moving it to the other brick and mortar bank.
The interest is also low at 0.20% but the minimum is $200 vs $5000.
I don't see a benefit in the B&M location over an online account.
The way I see it the advantage of a B&M vs. online is that the OP will be able to access the whole $5,000 during normal banking hours. After hours the ATM limit will dictate access. In the case of the online bank the ATM limit will dictate access at all times.

If the OP wants access to $5,000 day or night then their better choice would be to have the $5,000 in cash at their residence.
Maybe I'm missing something. When does one ever need $5k in hard cash immediately within minutes outside of normal banking hours? I can't think of a single situation that's within reason.
Some examples might be:
Post cash bail.
Make a wager on a what you believe is a mispriced game before the odds change (sports betting).
Buy something from a private party.
Loan money to a friend.
I guess it all could be much worse. | They could be warming up my hearse.

hudson
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Re: keep emergency cash at local bank?

Post by hudson » Thu May 07, 2020 2:10 pm

mervinj7 wrote:
Thu May 07, 2020 1:30 pm
Maybe I'm missing something. When does one ever need $5k in hard cash immediately within minutes outside of normal banking hours? I can't think of a single situation that's within reason.
$5k in hard cash? I see your point for having actual cash. If I needed that much cash, I would likely have advance notice. I can't remember ever needing that much personal cash.
But, I've needed to have that much or more in my checking account to buy a car or to pay a contractor. I've also needed that much or more when I double paid a credit card by mistake. One of the payments didn't work. My solution is to have cash in my credit union's money market account for contractors or mistakes. I'm considering using AMEX's high yield savings account because they've got some kind of fast transfer where they can get the money moved to my checking account within the same business day. I could also write a check on my brokerage's settlement account, but I'd have to sell something to make that work.

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5th_Dimension
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Re: keep emergency cash at local bank?

Post by 5th_Dimension » Thu May 07, 2020 2:11 pm

tashnewbie wrote:
Thu May 07, 2020 1:39 pm
I can't think of a reason I would ever need more than that amount in cash on short notice.
The hobby I’m involved in has transactions between participants that involve several thousand dollars all the time, often at contests out of town on a weekend. A deal too good to pass up might be missed if you couldn’t come up with the cash quickly.
Sometimes I feel like I'm waltzing in a 4/4 world.

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8foot7
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Re: keep emergency cash at local bank?

Post by 8foot7 » Thu May 07, 2020 2:13 pm

Not to mention that one time you really need cash from your online bank and they decide your withdrawal looks 'suspicious' and freeze your account/pause the withdrawal until they are satisfied it is a legitimate request. There have been several threads on Ally here in particular where transfers get initiated, money withdrawn, and then it goes into a black hole while some security team you can't talk to directly fishes through things to see if they're going to allow you to get your own money or not.

I would not have this problem walking in, talking to a teller, showing my drivers license, and withdrawing money in person. No, I can't withdraw a ton of cash this way, but 5k is not a problem.

I don't think it's a bad idea at all to be able to go somewhere in person with your ID and get a reasonable amount of cash without relying on cards or ACH. Local banks here are open 9-5 weekdays and most have Saturday hours from 9-12 these days, so unless something bad happens Saturday afternoon, you're never much more than 18 hours away from access to cold hard cash.

mervinj7
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Re: keep emergency cash at local bank?

Post by mervinj7 » Thu May 07, 2020 2:14 pm

hudson wrote:
Thu May 07, 2020 2:10 pm
mervinj7 wrote:
Thu May 07, 2020 1:30 pm
Maybe I'm missing something. When does one ever need $5k in hard cash immediately within minutes outside of normal banking hours? I can't think of a single situation that's within reason.
$5k in hard cash? I see your point for having actual cash. If I needed that much cash, I would likely have advance notice. I can't remember ever needing that much personal cash.
But, I've needed to have that much or more in my checking account to buy a car or to pay a contractor. I've also needed that much or more when I double paid a credit card by mistake. One of the payments didn't work. My solution is to have cash in my credit union's money market account for contractors or mistakes. I'm considering using AMEX's high yield savings account because they've got some kind of fast transfer where they can get the money moved to my checking account within the same business day. I could also write a check on my brokerage's settlement account, but I'd have to sell something to make that work.
I have no problems with keeping several times that in a checking/online savings account but I just don't see the rationale for needing cash without advance notice. In the old days, craigslist purchases needed cash but now everybody does Venmo. Bail bonds can be posted using CC. Friends take check or Venmo. I guess if I gambled...

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Re: keep emergency cash at local bank?

Post by Jack FFR1846 » Thu May 07, 2020 2:17 pm

I've been watching some of the rules for businesses who will shortly be opening up from the Covid shutdown on a limited basis. A good percentage of them say "no cash will be accepted".

I'll continue with the excessive $20 I keep in my wallet for now. I'm not really sure why I even carry that.

My credit union has B&M locations all over, plus ATMs. I mostly only use them to deposit cash that I mostly get from my kids who get it from their grandfather and then don't know what to do with it.
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lthenderson
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Re: keep emergency cash at local bank?

Post by lthenderson » Thu May 07, 2020 2:21 pm

mervinj7 wrote:
Thu May 07, 2020 1:30 pm
When does one ever need $5k in hard cash immediately within minutes outside of normal banking hours? I can't think of a single situation that's within reason.
As someone who frequents Saturday afternoon auctions that are cash only, it has happened to me plenty of times.

tashnewbie
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Re: keep emergency cash at local bank?

Post by tashnewbie » Thu May 07, 2020 2:50 pm

5th_Dimension wrote:
Thu May 07, 2020 2:11 pm
tashnewbie wrote:
Thu May 07, 2020 1:39 pm
I can't think of a reason I would ever need more than that amount in cash on short notice.
The hobby I’m involved in has transactions between participants that involve several thousand dollars all the time, often at contests out of town on a weekend. A deal too good to pass up might be missed if you couldn’t come up with the cash quickly.
You're floating in higher-end circles than I am (and it sounds like, possibly more exciting ones). Have fun!

TJHOFF
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Re: keep emergency cash at local bank?

Post by TJHOFF » Thu May 07, 2020 3:14 pm

go_mets wrote:
Thu May 07, 2020 1:30 pm
Which online banks have ATM cards?

I have onine savings accounts with Marcus and Barclays.
Discover

123
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Re: keep emergency cash at local bank?

Post by 123 » Thu May 07, 2020 3:49 pm

MathWizard wrote:
Thu May 07, 2020 9:29 am
No you are not being irrational...
What you're doing is fine. Those that try to maximize the return on every cent can box themselves into a corner. The lessons of the last few months tell us that it's difficult to plan for the unknown so it's best to tolerate some ambiguity.
The closest helping hand is at the end of your own arm.

Dandy
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Re: keep emergency cash at local bank?

Post by Dandy » Thu May 07, 2020 3:50 pm

Everywhere I have my money I have the ability to write a check/draft and have set up the ability to ACH with another firm. On place I keep some money is a local name brand brick bank. Our main checking is at an online firm -- the nice thing about that is 24/7 service vs most brick banks.

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