Holding Emergency Fund in Credit Union CD rather than HYSA?
Curious if anyone else is doing this or has thoughts.
My credit union is offering 3.90% APY on a 12-month CD right now, which beats most HYSAs I've looked at (Marcus is 3.40%, most others in the 3.10–3.40% range). The thing that makes this interesting is the early withdrawal penalty (you only forfeit the interest earned to that point. Principal is always fully accessible).
So in a true emergency, worst case, I pull the money, lose a few hundred dollars in accrued interest, and walk away with every dollar of principal intact. On a $25k emergency fund pulled at month 6, you're maybe out $400–500 to access your money. Seems like a pretty negligible "liquidity premium" to pay for an extra 50+ basis points.
With the Fed holding steady and potential rate cuts later this year, locking in 3.90% for 12 months also seems like decent timing.
Am I missing something here? Feels like a no-brainer but wanted a gut check from people who have thought about this more than I have.