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Affordable Bank Accounts to Help Build Emergency Funds

10 options with low fees and minimal initial deposits

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One of the foundations of financial planning is having an emergency fund — enough money to cover a new set of tires, a root canal or a period of unemployment without going into debt. To create an emergency fund, you'll need a low-cost savings account, preferably one that will help you save automatically. Unfortunately, a survey by the Consumer Federation of America (CFA) found that relatively few of the nation's largest banks offer them.

Tips for Building an Emergency Fund

Many Americans live on the financial edge: A 2019 analysis of data by the AARP Public Policy Institute found that 53 percent of households had no emergency savings account. A 2019 report from the Federal Reserve found that 4 in 10 people couldn't pay an unexpected $400 expense with cash, savings or a credit card charge that could be quickly paid off.

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Furthermore, those in low- and moderate-income households often see big income swings during the year, meaning that sometimes even routine expenses can be hard to afford without savings to fall back on.

About 29 percent of people who do have an emergency fund keep it in cash hidden at home. While that's good for late-night emergencies, a wad of cash in a coffee can is easy to steal — or to lose in a disaster, such as a fire or tornado.

Take control of unexpected expenses with our free planning tool, the AARP Money Map.

For most people, the best place for an emergency fund is a no-fee or low-fee bank account with no withdrawal penalties. The account is insured by the federal government, and you can make withdrawals in person or via an automated teller machine. Keeping an emergency fund at a bank can have an added advantage: The bank can move money to the emergency fund automatically at regular intervals and help you build a cash stash.

Although wealthier families tend to use these accounts, those with less income tend not to. One reason is the fees: Keeping $300 in a bank account could mean paying $48 to $72 a year, while earning trivial amounts of offsetting interest income. And some accounts want $2,500 or more as an initial deposit.

The Federal Deposit Insurance Corp. has a BankFind tool for finding low-cost online checking account. You can open an account with a laptop or even a mobile phone. And, if you register your account information with the Internal Revenue Service, you can get your federal stimulus check much more quickly than you would with a paper check. (And you won’t have to pay any fees to cash the check).

The CFA looked at 101 banks with the most branches to see which offered accounts with minimum initial deposits of $50 or less. It also looked for accounts that had no monthly fee and allowed automatic monthly deposits.

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Affordable savings accounts

These accounts have low fees and low minimum initial deposits, provided you agree to regular automatic transfers from an associated checking account, according to the Consumer Federation of America. 

Minimum opening deposits (listed in descending order by number of branches)

  • $25 Wells Fargo Way2Save 
  • $25 Chase Bank Savings
  • $25 PNC Bank Standard Savings
  • $25 BB&T Regular Savings
  • $5 Key Bank Active Saver
  • $25 SunTrust Select Savings
  • $1 Citizens Bank One Deposit Savings
  • $1 M&T Relationship Savings
  • $25 BBVA (Compass) Savings
  • $25 Bank of the West Classic Savings

Account offers can change, so be sure to double-check the terms of the account before you deposit money.

How to start an emergency fund

Financial planners typically recommend having three to six months’ worth of living expenses — not salary — in an emergency fund. For most people, that's an intimidating amount. Your best bet is to simply start an emergency fund with whatever you have and add to it regularly. One easy (and traditional) way to start is to save the change in your purse or pocket. Many banks will count it for free, and it doesn't take long to get up to $25 — enough to start an emergency fund at some banks.

Another way is to save part of your tax refund. The Internal Revenue Service says the average tax refund so far in 2020 is $3,125. If you put half ($1,563) in the bank, you'll have a good start on an emergency fund. Add $50 a month, and you'll have $2,163 after a year.

If you have the time and ability, a side gig is also a good way to jump-start an emergency fund. Bringing in even a small amount of extra income every month can put you on a path to saving. Cutting out recurring charges, such as internet services you don't use any more, is another way to get money for savings.

And always look for banks or credit unions with low or no monthly fees. When you're starting out — and even if you've been saving for a long time — every dime you avoid in fees is a dime in your pocket. Make sure that the bank doesn't levy a charge to withdraw money either.

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