When you're planning to build up a fund for emergencies, unexpected expenses or lean financial times, it's important to consider the best way to save. You may decide to place your money into a certificate of deposit (CD), savings account or another type of savings product.
Your first savings goal should be to have emergency cash on hand. Preferably, this should equal about three- to six-months' living expenses and may even take priority over eliminating debt, depending on your situation. Although paying down debt can save substantial amounts of interest over time, it may not provide the safety net you need to avoid incurring further debt in an emergency.
You might consider a “some now, the rest later” approach, where you put aside a small emergency fund in the short term, typically in something that gives you easy access to your money, like a Money Market Account or Online Savings Account from Ally Bank. You could start with $500 to $1000 for now, then concentrate on paying down debt. Once that's out of the way, you can return to building your emergency fund.
Once you are comfortable with your emergency fund, you might want to consider some longer-term strategies for savings. Ally Bank offers a wide range of CDs with rates that are consistently among the most competitive in the country. You can open and fund any of our CDs with any amount and your deposits are insured by the FDIC up to the maximum allowed by law. Learn more by visiting Allybank.com or call live, 24/7 customer care at 877-247-ALLY (2559) today.