There are a couple of schools of thought on where to keep your emergency fund. Many people like to keep their emergency fund at their local bank so they can get immediate access to their money. Others, including myself, prefer to keep their emergency fund in an online savings account for the higher yield, low minimum balance requirement, and lack of monthly fees. The drawback is that it can take a couple days to transfer your money to your checking account. My solution to this would be to use my credit card for the immediate spending needs and then pay it off when the funds transfer was complete.
Since I have opened a few online savings accounts in order to receive bank bonuses I’ve been able to compare which accounts I like best. My favorite is probably the ING DIRECT Orange Savings Account
(aff link). My affection for this account probably has a lot to do with the fact that I’ve made about $500 in referral bonuses from them. Their yield of 3.0% isn’t the highest but it is much higher than most banks and the referrals have more than made up any interest deficit. If you want to open an account with $250 or more and receive a $25 bonus just click on the link on the Make $$$ With TFM page.
My newest and highest-yielding account is with FNBO Direct. This account currently pays 3.50% and has no minimum or monthly fees. After you open the account you can receive a $25 bonus for opening an online billpay account.
Technically, my Wachovia Way2Save account is my highest-yielding account. I’ve been receiving a promotional 16% interest on this account and when the promotional rate ends I’ll still be receiving 5% . The catch with this account is you’re limited in how much you can deposit in it. There is a $25 referral bonus for this account as well which you can find on the Make $$$ With TFM page.
There are a lot more good online savings accounts out there. These are just my current favorites that I have personal experience with.