Best way to hold £5000 emergency fund?

sharonlondon

I want to save £5000 as an emergency fund, and I am wondering what is the smartest way to hold that money? The funds need to be quickly accessible if I ever need to withdraw them suddenly to cover emergency costs. Any advice on what kind of account I should store my emergency fund in? Thanks everyone!

oxford_yellow

marcus from Goldman Sachs: https://www.marcus.co.uk/uk/en

1.50% AER with bonus of 0.15% gross for a year



online only but i have not had any issues in getting money out (approx an hour) - easy to setup.

eskbanker

oxford_yellow wrote: »

marcus from Goldman Sachs: https://www.marcus.co.uk/uk/en

1.50% AER with bonus of 0.15% gross for a year

Just to be 100% clear, that's 1.5% including the bonus ('with' can be read multiple ways in this context)!

Other options include current accounts (Nationwide FlexDirect £2,500 @ 5% and TSB Classic Plus £1,500 @ 3%) and regular savers, for those happy to do more work for better reward....

sal_III

+ 1 for Marcus, That's what I'm using for my 5k emergency fund After 1 year is over (in December) I will likely move it to a new Marcus account in my wife's name to get the bonus for another 12m. Or maybe Virgin Money Double Take E‑Saver again 1.5% but only 2 withdrawals/year which is fine for emergency fund i guess.

All the 3-5% savings accounts have low limits and conditions/limited time high rate, that it's just not worth the hassle of opening them IMHO. You get better return from £125/£175 switch incentives if you are going to open a new account for limited time.

PRAISETHESUN

Any sort of current account or easy-access savings account should suit just fine

https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/#easyaccess
https://www.moneysavingexpert.com/banking/compare-best-bank-accounts/

surreysaver

PRAISETHESUN wrote: »

Any sort of current account or easy-access savings account should suit just fine

https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/#easyaccess
https://www.moneysavingexpert.com/banking/compare-best-bank-accounts/

Except the Post Office. Even if their systems work, it still takes one working day to get your money out.

Novice_investor101

I gave up chasing the 0.1%/0.2% increases here & there every other couple of months with the various easy access savers jostling for position in the best buy tables - I dumped my £7.5k emergency fund into Premium Bonds - I don't miss the constant moving of money.
It takes a couple of working days to get the money out, but I've got credit cards I can use to cover most things so having a couple of days wait isn't really an issue. For any expensive purchase like appliances, a car etc I'd always pay by credit card anyway for the protection afforded so needing the money instantly isn't really an issue.

Apodemus

Novice_investor101 wrote: »

I gave up chasing the 0.1%/0.2% increases here & there every other couple of months with the various easy access savers jostling for position in the best buy tables - I dumped my £7.5k emergency fund into Premium Bonds - I don't miss the constant moving of money.
It takes a couple of working days to get the money out, but I've got credit cards I can use to cover most things so having a couple of days wait isn't really an issue. For any expensive purchase like appliances, a car etc I'd always pay by credit card anyway for the protection afforded so needing the money instantly isn't really an issue.

I’m the same, Premium Bonds for the longer-term bills and emergencies, current account for the day-to-day stuff and the direct debits. Credit card for anything that turns up with a need for an instant payment.

danm

I would hate for this post to come across the wrong way, but £5,000 is a relatively small amount of money from the perspective of its capacity to earn interest.


£50-£100 per year interest at best for easy access.


I would start with who you bank with (i.e where your current account is). In theory that should be the easiest option. you should then be able to view and manage your money in a single place. If you can earn anywhere around 1% interest my view would be to take that options for convenience and not worry about chasing the extra few basis points in interest rate - more paper work, more transfers, more risk in sending the money back and forth to the wrong place ( ...just me )


if your bank does not offer a saving product like this then based on my experience, I would also echo what others have suggested with Marcus Bank. I have had a very positive experience with them so far.

cattie

As with other posters here my emergency money is held in premium bonds. I've had quite a lot of £25 wins plus one of £50 over the past couple of years, so the money has increased thanks to that.

Novice_investor101

I agree completely with danm, for a sum of money such as £5k, & my own £7.5k, I just did not find it worthwhile constantly moving my money around chasing an extra 50p or so a month in interest. Especially as it was sometimes in cash ISA's depending on which bank upped what rate & when. Trying to keep track of what I'd payed/transferred in & out of the cash ISA messed with how much I could pay into my investment ISA's where I have a fair bit more money.

Either opt for an account like Marcus 1.5% or just go Premium Bonds.
I've already won £75 this year, which is about the same as I would have got in a savings account.