Five Places to Put Your Cash to Work

Bank of America, for instance, is offering a nine-month CD at 2.4% for consumers who invest at least $5,000. If you find a better rate a few months down the road or you need the cash, you're free to pull your money out -- as long as you reinvest it in a Bank of America deposit account.

The flexible terms make such CDs an attractive option for your emergency fund. "If you're going to have to keep money in the bank anyway, I would stick it in that," says New York certified financial planner Cary Carbonaro. "Even more so if we're going through a recession."

5. Avoid Exotic Investments

Each rate cut by the Federal Reserve makes investing in assets with some risk more appealing. But beware: Nothing is as safe as cash.

Case in point: Several banks allegedly hocked auction-backed securities as safe substitutes for cash. After they lost value in February, a rash of lawsuits accused the banks of deceptive advertising.

You may make more money investing your emergency money in high-rated corporate bonds or a diversified mutual fund. But then again, you're taking a risk.

You'll pay for it, but keeping your emergency money in cash, Carbonaro says, is at least "a place to park it that will let you sleep at night."