Millions of Americans with cash sitting in traditional savings accounts at the largest U.S. banks are earning almost nothing on those deposits, even as money-market funds deliver yields near 4 percent. The gap between what short-term market instruments pay and what big banks offer on ordinary savings has persisted for months, and federal data from the SEC, FDIC, and Federal Reserve confirms the spread remains wide as of early 2026.
How the Fed’s 3.50%-to-3.75% Rate Widens the Deposit Gap
The Federal Reserve’s target range for the federal funds rate sits at 3.50% to 3.75%, and short-term cash vehicles have moved largely in step with that policy stance. Money-market funds, which invest in short-term government and corporate debt, track that rate closely because they hold instruments such as Treasury bills, repurchase agreements, and high-grade commercial paper whose yields reset quickly as monetary policy changes.
The SEC publishes an asset-weighted seven-day gross yield series, broken out by fund category, including government, Treasury, prime, and tax-exempt funds, for both retail and institutional share classes. Its regularly updated money-market statistics show these yields clustering near the policy rate, giving everyday investors a straightforward way to earn competitive returns on idle cash. A companion SEC visualization focused on the seven-day gross yield confirms both the methodology and the “around 4%” figure cited by many analysts.
Big-bank savings accounts have not followed suit. While money-market funds reset quickly, banks adjust what they pay on deposits at their own pace, and often only when competitive pressure forces them to. As a result, the policy-rate hikes that lifted yields in the money markets have translated into only modest changes for standard savings accounts at the largest institutions.
The FDIC’s national rate figures, published in its March 2026 release, show that benchmark savings deposit rates remain far below 1 percent at most large institutions. According to the agency’s national rate data, the average savings rate has stayed well under half a percent even while the Fed has held its policy rate above 3 percent. That spread, roughly three to four percentage points, represents real money lost for households that leave cash in a standard savings account instead of moving it into a money-market product. On a $10,000 balance, the difference can exceed $300 a year.
SEC Yield Data and FDIC Rates Confirm the Spread
The SEC’s money-market statistics draw on regulatory filings submitted through the EDGAR system, making them among the most reliable public measures of short-term cash returns. Because the yields are asset-weighted, larger funds exert more influence on the averages, reducing the impact of outliers that might advertise unusually high or low rates. These figures are not promotional quotes from fund companies; they are regulator-calculated snapshots of what investors are actually earning across the market.
On the deposit side, the FDIC’s national rates serve as a benchmark for regulators when they apply deposit rate caps to certain institutions. The methodology aggregates rate data from banks around the country, with separate benchmarks for savings, interest-bearing checking, money-market deposit accounts, and various certificate-of-deposit maturities. In the current environment, the savings benchmark has barely budged compared with the sharp rise in money-market yields, underscoring how little of the Fed’s policy tightening has flowed through to basic retail deposits.
The contrast is not subtle. It reflects a structural pattern in which the largest banks, holding the bulk of U.S. consumer deposits, face limited pressure to raise what they pay on simple savings products. Smaller banks and online-only institutions may advertise higher rates, but they collectively hold a much smaller share of total household balances than the biggest national franchises.
What Keeps Big Banks From Raising Savings Rates
One explanation centers on market concentration. The biggest U.S. banks control an outsized share of total deposits, and most of their retail customers do not actively shop for higher yields. Switching costs, brand loyalty, and the convenience of bundled checking and savings accounts all reduce the incentive for consumers to move cash elsewhere, even when the potential gain is hundreds of dollars a year.
For the banks, low “betas” on deposits-the degree to which deposit rates move when market rates change-are highly profitable. Paying a fraction of a percent on savings while investing or lending those funds at rates tied more closely to the Fed’s policy range widens net interest margins. As long as customers remain relatively insensitive to the gap, large institutions have little reason to compete aggressively on standard savings yields.
Regulation also plays a role. While post-crisis liquidity and capital rules encourage banks to fund themselves with stable retail deposits, those same rules do not require them to match market-based cash returns. In practice, that means banks are rewarded for gathering “sticky” deposits that are slow to leave, even if the rate paid on those balances lags far behind alternatives.
For households, the implications are straightforward. Cash left in a traditional savings account at a major bank is likely to earn a fraction of what similar funds could generate in a regulated money-market fund or a higher-yielding deposit product. The data from the SEC and FDIC suggest this is not a temporary anomaly but a persistent feature of the current rate environment-one that will continue to matter as long as the Fed keeps its policy rate well above zero.
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