Fixed term or easy access for your savings, which is better?

For some, their emergency fund only covers job loss, but for our emergency fund, it pretty much covers everything, and that's why we keep it a little higher.

I do wish I could be like others and have multiple accounts for all of their different emergency savings. I've always heard that this is the way to go.

For example, you'd have a different account for your car repair fund, house repair fund, job loss fund, etc. This is so that you only take certain money out of each fund. Does anyone do this? Tell us your thoughts and experiences! Does it work well for you?

We have a almost half a year of bare expenses in it, along with one potential big house repair or replacement (such as if the furnace broke, which I've been told can be $4K or more). Quick online loans can always be used as well.

Our house is a little older (hey, it has charm!) so we are expected something to happen eventually. Hopefully nothing too crazy such as the floor caving in or something happens.

I should also mention that we save a lot of money every month (over half of our combined monthly after-tax income), so if something  bigger did arise, we could most likely pay for it up front (extra debt payments to my student loans would be pushed to the back-burner, but they would be paid), as long as the fix isn't too, too expensive.

Also, right now we are slowly dwindling our emergency fund and putting some of this extra cash towards my student loans. We haven't touched our emergency fund before now, and it almost seems like a waste for it all to be sitting there and gaining hardly anything back.

Determining how much you need in your emergency fund is a little difficult.  However, the question right now is, where should you keep your emergency fund savings? Should you keep it in something where you can gain quick access to it, or should it be a fixed-term investment?

There are pluses and minuses to both options, as I've listed below:

Easy access

There are many positives to having an easy access savings account. With a money account that is easy to access, you can get the money right when you need it.

So if you truly have an emergency, you can pay for it right then and there, without having to wait for the funds (as you would with a fixed-term savings account). An emergency is an EMERGENCY right? That means that you need to have the funds available immediately!

Keeping your emergency fund in your savings or checking account makes it very easy to access. However, there is likely low or no interest being accrued!

Money market accounts are another option. The interest rate is usually a little higher and is well fit for slightly longer (but still short-term) investments. Money is still easy to take out of money market accounts.

Fixed-term

However, there are also positives of having a fixed-term savings account for your emergency fund as well. Usually the fixed-term investment products have a higher interest rate, and this is the traded risk that they receive.

If you were able to take your money out immediately, then the interest rate would most likely be lower (which is a negative of an easy access investment product).

Where do you keep your back-up savings/emergency fund?