That may seem an idle question since most people would answer: “In the local shopping mall”. But, if you’re reading The Money Blog, you would probably give a different reply. Here’s our U.S. finance correspondent to give his answer:

What should you do with your idle cash? Let’s say you’re responsible and you’ve accumulated an emergency fund. This is money that you can’t take risk with, but it would be nice to earn something on it, right? Depending on what you want, the world is full of options.

You can always leave it in a checking or savings account. Of course, you won’t earn much. Most brick and mortar banks are still paying almost nothing on deposits. However, the internet bank accounts make it more appealing. HSBC, INGDirect, and Capital One all have competitive rates these days – with no fees or minimum balance requirements. Whatever bank you use, make sure it’s FDIC insured.

You can also use money market funds. These are technically mutual funds that invest in short term issues. The advantage of a money market fund over a bank product is that the interest rate will likely change more rapidly (of course, that’s only an advantage if rates are going up and not down). The disadvantage of a money market is that there’s technically a possibility that you can lose your money if the underlying “money markets” fall apart. Read the fund’s prospectus to see what it invests in, and how you feel about that risk.

With a money market, you can sometimes get a checkbook to access your cash. They don’t like for you to write small checks, so they impose a minimum check size (like $500 per check). With a bank product, you usually link your account to a checking account and move money electronically when you’re ready to spend it. With either type of account, you can make deposits by check or electronically.

Which is better? It depends. Look them both over, compare rates, and figure out what suits your needs.