Need feedback on emergency fund

[ngando]

Hello,

I'm sitting on a mortgage, I'm a dad and happily married. Currently I'm in BoFa and to get premium benefits on my credit card they force you to park 100k in an account. I thought it could be a good idea to park my emergency fund there, and I've done that for about a year (1 yr worth of expenses in cash). What I wonder is if I can open a Merrill Lynch account and have that money generating some kind of interest (money market fund for instance?) instead of having it generate virtually 0%.

Thanks!

[terran]

Sure (although I don't know how much interest Merrill Lynch money market funds pay), just don't invest it in anything that can lose (much) value if it's intended to be an emergency fund. If you have an investment account (either taxable or IRA) that you can move to Merrill to get the credit card bonus I'd do that instead. You can invest in low fee Vanguard ETFs (among others) without additional fees at Merrill Edge. Then you can put the emergency fund at an online bank that pays higher interest.

[dukeblue219]

Yes, you can and should meet the rewards tier by using Merrill Edge. You don't need to have money "parked" at BoA or Merrill Edge unless you really want 100k in a money market. A bunch of cheap VTI or VOO or whatever you are invested in will work as well.

Occasionally ME has transfer bonuses as well, so you can really clean up between that and the CC rewards from BoA.

[howard71]

Sounds like a simple math problem. Are the premium benefits worth it compared to what you will be losing on the interest

[dukeblue219]

Sounds like a simple math problem. Are the premium benefits worth it compared to what you will be losing on the interest

There's no need to lose anything.

[jpelder]

Yes, you can and should meet the rewards tier by using Merrill Edge. You don't need to have money "parked" at BoA or Merrill Edge unless you really want 100k in a money market. A bunch of cheap VTI or VOO or whatever you are invested in will work as well.

Occasionally ME has transfer bonuses as well, so you can really clean up between that and the CC rewards from BoA.

This is a good idea. Might even be worth opening a Merrill Edge Roth IRA and transferring a big chunk of balance over. IIRC, they don't charge any fees to buy ETFs, so it'll be easy enough to buy some BND, VTI, and VXUS and brew a three-fund portfolio.