How much do you really need for a rainy day?

rainy day

Putting aside money for a rainy day certainly isn't the most fun use of your hard-earned cash, but life's unexpected events mean you should try to build up a savings pot that will cover you for at least a few months in the event of losing your job, being landed with a particularly hefty bill, or if your car suddenly breaks down. "Three to six months' salary is a reasonable target," says financial data provider Defaqto's David Black.

It goes without saying that you will need to find the best home for your cash by shopping around for the highest-paying interest rates - not an easy feat with base rate still slumped down at 0.5%.

The best-paying easy access account (which means you can get your hands on your money at any time), is currently from ING Direct, which offers a rate of 2.75% on balances from £1.

But Black also suggests using credit cards in an emergency, if you don't have sufficient funds saved. Again, in this event, you will still need to sift out the best deal.

The market-leading card is currently the NatWest Platinum card, which is offering a 16-month interest-free period on balances transferred, with a 2.9% fee, as well as 0% interest on purchases for three months from account opening.

An alternative to falling back on your credit card or using up your savings in a couple of months, however, is to take out some form of insurance cover that pays out if you're sick.

Income protection will pay up to two-thirds of your gross salary tax-free, with average premiums of around £30 a month. For those with families or a mortgage to pay, life insurance and critical illness are other forms of protection worth considering.

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Do you work out what balance transfer fee you will pay before switching credit cards?

Yes: Of course. Fees can be significant and I don't want any nasty surprises.
43% (343 votes)
No: I only ever take out a fee-free deal.
17% (138 votes)
Yes: It's the only way to work out the true cost of the credit card facility.
25% (200 votes)
No: I assumed a 0% balance transfer deal meant there were no fees.
14% (109 votes)
Total votes: 790