I have $0 emergency fund liquid savings, with the exception of periods of time when I’m trying to purchase a home and need at minimum 5% down payment, I never lend the bank my $ at lower than inflation rate in a liquid savings account. However, I understand those of us who need the peace of mind to have some liquid asset to support our loved ones when there are unexpected expenses. So I wrote about 4 sources of rainy day funds 1. with 0% interest rate for 21 months 2. with 0% fee for getting (almost) immediate cash for 15 months interest free 3. highest cash back 10% on rainy purchases you make and 4. for the highest liquid savings rate at 1.11% annual interest rate.

Some principles I recommend include:

  1. learn about how much credit limit you may get.
  2. don’t open the card until you actually need the money, this will provide you with the longest 0% interest promotional period buffer, allowing you to save up the money to pay it off.
  3. if you’d like, you can always have one card open for immediate access, and then open another card when the actual emergency hits. So the card you already open may only have 3-6 months of 0% interest promotional period on it, but you can balance transfer whatever you spend/charge on this card onto the new card you open (you usually get the card in the mail ready for activation/usage after applying on line/on the phone within 3 weeks.)
  4. cash is king, credit is queen. Smart credit use allows your cash to work harder for you. Be stingy and selective when you lend out your hard earned cash!

  • Longest Interest Free Promotional Period. Citibank Simplicity.
    • 21 months 0% interest/APR on purchases. Almost all emergencies can be paid for with credit card nowadays. So if I need to buy a 20k new roof and I want to only pay $200-400 monthly minimum until I pay the remaining balance in 20 months, I’ll use this card.
    • Alternatively, I can use the balance transfer offer, which is 3% fee on the amount balance transferred, or in an access check written to myself. 3% fee over 21 months is effectively 1.71% annual interest rate.

Citi Simplicity® Credit Card with balance transfers Citi.com

  • Easiest fast access to cash, no transaction fees for within first 60 days of opening the account. Chase slate. Simply write myself a check within 60 days of account opening date, I get completely interest free money this way. This is the only card in the market without transaction fee.


  • Biggest incentive. Any card discover. Rotating 5% plus double rewards at anniversary. (10% cash rewards if you are using a particular categories.) How about a rainy day fund that pays you cash for taking care of your emergencies? 10%, not shabby. 10% on a 15k roof is $150 cash back in your pocket for being a discover customer. More cards that will reward you with cash, millage, amazon dollars, gift cards. I just like the 10% hard cold cash from discover the most.


  • 1 month of liquid asset such as high interest savings 1% in online banks. Truth is I don’t have such an account, but simply don’t believe in letting banks borrow my money for 1.11% while I could keep this cash for myself in a tax-sheltered index funds making me annualized 8% over the long run (>10 years). However, I understand some need the peace of mind of having completely liquid assets. So this is a good one at least it pays the highest interest in liquid savings in the market.

Money Market Account EverBank

I hope this expends our mind a bit in the definition of rainy day fund. We work hard, it’s probably not a bad idea to put our money to work, in index funds earning potential annualized 8%, or pay or student loans, guaranteeing 7% interest savings, or pay our mortgage earning guarantee 3-4% interest savings. Or anything else that will earn us more than 0.03% sitting in BOA checking/liquid savings.

Personal finance is personal. While I’m comfortable having all my pennies in my investment (403b, roth ira, MWM’s 529, MWM’s roth IRA, my solo 401k), and nearly no cash at all in liquid assets bearing low interest to me, some may want to have 3-12 months of monthly expenses saved in a liquid account. It doesn’t need to be all or nothing. You don’t have to be an extremest like me 🙂 I hope this article open up some options for you to consider the best combination of rainy day fund for your loved ones and you!

What are your thoughts?

Personal Finance, Investing, Retirement, Lifestyle More articles like this on Physician’s Money Digest.

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