By Sabrina Karl

You’ve heard the advice dozens of times: Establish an ample emergency fund so you can weather life’s financial surprises. But is a savings account the only smart place for these rainy day funds?

The answer is no. Sure, a high-yield savings account can be a great choice, giving you unfettered access to your money while earning a little interest. But stashing your savings in a certificate of deposit can be even smarter, since it’ll earn a greater return.

True, CDs aren’t as flexible as savings accounts. But their restriction on withdrawals can be helpful if it fends off your temptation to tap the funds. Plus, if you choose your CD right, accessing the funds in an emergency won’t carry a huge price tag.

But won’t you be hit with an early withdrawal penalty if you cash in the CD before its maturity date? Yes, but shopping around is key. Not all early withdrawal policies are created equal, and it’s not hard to find a CD with a mild or moderate penalty.

Also remember that this is money you’re socking away for an emergency, not to withdraw willy nilly. So because your odds of needing to access the funds are low, a reasonable early withdrawal penalty can be worth the risk.

Still, if you’re wary of putting all your emergency funds into a CD, opening multiple certificates enables you to cash out just a portion of your CD funds rather than all of it. Or, put some into a savings account so you’ll always have ultra-quick access to a portion of your money.

If you’re saving the recommend 3 to 6 months’ living expenses in an emergency fund, it makes good sense to maximize your return while that money sits idle, and CDs can provide an excellent means to that end.