I Savings Bonds for Emergency Funds

With CD rates so low another option for emergency funds is US government I Savings Bonds. They keep pace with inflation and you don't owe state income taxes on the interest earned, only federal taxes. The main drawback is you cannot withdraw funds in the first 12 months. If you withdraw within 5 years you lose 3 months interest (very similar to early withdrawal penalties on CDs).  Consider dividing your emergency funds between CDs and I bonds. I bonds are purchased online (treasurydirect.gov). Another nice feature compared to CDs is you only pay taxes on the interest when you withdraw, not yearly (simplifies tax prep). You can withdraw partial amounts at any time after 12 months.  See:  http://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm