Building an emergency cash fund? Make sure you’re saving in the right way, at the right place.

Before deciding how you’ll save, think carefully about how you’ll access your money, what kind of expenses you’ll incur tapping into those assets and where you can get the best return. No matter what type of savings account you choose, you should be able to access your cash easily using free electronic funds transfers to and from your primary checking account.

Emergency Fund “Dos” and “Don’ts”:

Invest in an online savings account or money market account. You’ll earn more interest on your emergency fund cash than in a checking or savings account, especially if you choose an online bank such as Discover Bank.

Don’t just look for a money market account with the highest interest rate. Make sure your financial institution is FDIC insured. Visit FDIC.gov for details.

Use CDs to improve your rate of return. Save a month’s worth of emergency fund cash in an online savings account. Then, transfer that cash to a CD and keep on saving. When that second month of savings is ready, transfer it into another CD. Eventually, you’ll “ladder” your CDs so you’re earning higher rates of return, but have reasonable access to your cash when each CD matures. Learn more about today’s CD rates.

Automate your savings. Arrange to automatically deposit your paycheck into your emergency fund and then move only the amount you need for monthly expenses into your checking account. You also can set up a repeating transfer from any bank account into your savings account.

Think through how much cash you’ll need and when you’d need it. Cashing out CDs early could mean you’ll pay a penalty. Cashing in an IRA can mean a big tax bill plus penalties. Defining what emergency means to your family will help you to access that cash only in a true emergency.

Don’t invest emergency savings in the stock market. That could expose your money to much higher risks—you could lose some or all of it in a market downturn, or have to pay additional taxes and fees.

Don’t invest emergency savings in a tax-deferred retirement account. If your emergency fund is invested in a traditional individual retirement account (IRA) and you’re under age 59 ½, you’ll have to pay taxes and penalties when you make a withdrawal.