The Federal Reserve raised interest rates in September for the first time since 2023, and it signaled that another increase could come before the year is out. For savers, that should be good news. For most people with money sitting in a traditional bank account, it has not changed much at all.
The gap between what cash can earn and what most banks actually pay has become one of the biggest money stories of the year. It matters for retirees living off savings, and it matters for bank stocks. The biggest U.S. banks report third-quarter results on Oct. 13 and 14, and those reports will show how much of the higher-rate windfall they are keeping.
- FDIC: the national average savings account paid 0.37% in its September update, down from 0.40% a year earlier, while the Fed's benchmark rate now sits at 3.75% to 4.00%.
- Crane Data: the 100 largest money market funds yield about 3.7%, and the Investment Company Institute counts $7.89 trillion in money fund assets after a record $7.98 trillion in early September.
- Bank of America: the spread it earned on consumer savings deposits widened to 3.46% in the second quarter from 3.21% a year earlier.
The Fed moved. Most bank accounts did not.
On Sept. 16, the Fed voted 12 to 0 to lift its target range by a quarter point to 3.75% to 4.00%. Officials' median projection points to about 4.1% by the end of this year, which implies one more quarter-point increase. The next two decisions come on Oct. 28 and in early December.
Bank savings rates have barely noticed. The FDIC's September survey, which was taken before the hike, put the average savings account at 0.37%, the average money market deposit account at 0.63% and the average one-year CD at 1.73%. The same FDIC table showed a one-year Treasury yielding 4.16%.
The weeks since the hike have not closed that gap. SwitchWize, which tracks 87 savings accounts, found that three weeks after the Fed acted, only 27 had raised their rate. Fifty-six had not changed, and four had cut. Standard savings accounts at Chase and Wells Fargo still pay 0.01%, according to Arca Savings, and Bank of America's pays 0.04%.
Online banks and money funds are paying up
The picture is different outside the big branch networks. Marcus by Goldman Sachs raised its online savings rate to 3.50% from 3.40%, and Ally, American Express and Capital One each moved to 3.10% from 3.00%. A handful of smaller online banks now pay above 4%, often with conditions such as direct deposit.
Money market funds have adjusted fastest because they hold short-term Treasury bills and repurchase agreements that reprice within weeks. The Crane 100 index of the largest taxable funds yields about 3.7%. Money fund assets hit a record $7.98 trillion in the week ended Sept. 2, according to the Investment Company Institute, and stood at $7.89 trillion at the end of September. Federal Reserve data show households alone held $5.3 trillion in money funds at midyear, up 12.4% from a year earlier.
The dollar gap is not small. Arca Savings estimates that moving $10,000 from a 0.01% account to a 3.50% account adds about $349 a year in interest. By comparison, a bank passing along the full quarter-point Fed hike would add only about $25 a year on the same balance.
Why the big banks can wait
Large banks hold huge pools of checking and savings money from customers who rarely move it. Arca cites a 2025 University of Chicago Booth study finding that 94% of depositors keep their account from one year to the next. That loyalty is worth a lot.
Bank of America's own disclosures show it. In the second quarter, the bank earned a spread of 3.46% on consumer savings balances, up from 3.21% a year earlier, even though the Fed's rate was lower over that stretch. The average rate it paid across all interest-bearing deposits fell to 1.98% from 2.38%. Net interest income rose 9% to about $16.0 billion, and the bank said full-year growth should land at the upper end of its 6% to 8% forecast. It also said that rates running a full point above market expectations would add about $1 billion of net interest income over 12 months.
JPMorganChase tells a similar story. Its second-quarter net interest income rose 10% to $25.6 billion, and it raised its full-year forecast to about $105.5 billion from $103 billion. Its finance chief said the single biggest reason for the higher forecast was higher deposit balances.
The pressure that could change it
That cushion is not guaranteed. The Wall Street Journal's Heard on the Street column noted in late September that bankers are telling analysts it is getting harder to avoid passing higher rates to depositors. Apollo chief economist Torsten Slok, whose charts circulate widely on financial Twitter, asked whether an "agentic bank run" is coming: AI assistants that automatically sweep household cash into accounts paying 3.3% to 5.0% instead of the roughly 0.1% national average on checking.
That has not happened at scale yet, but the steady flow into money funds shows savers are already sorting their cash. If more hikes arrive and more people shop around, the big banks will have to pay more to keep deposits, and their net interest income gains would slow.
What it means for savers
Start by checking the rate on your own statement. If your emergency fund sits in a standard savings account at a large bank, it may be earning close to nothing. An FDIC-insured online savings account can sit alongside your current checking account without moving your whole banking relationship.
For money you will not need for a year or two, CDs and Treasury bills can lock in today's yields. With the Fed still leaning toward higher rates, some savers prefer shorter terms or a simple ladder, with CDs or bills maturing every few months, so they can reinvest if rates keep rising. Money market funds are not FDIC insured, but government money funds invest in Treasury securities and similar assets and have historically been very stable.
What investors should watch
When JPMorgan, Wells Fargo, Citigroup and Goldman Sachs report on Oct. 13, and Bank of America and Morgan Stanley follow on Oct. 14, look past the headline profit. Watch the rate paid on deposits, whether deposit balances are growing or shrinking, and any change to net interest income forecasts for 2027.
Deal fees are the other swing factor. JPMorgan expects investment banking and markets revenue to grow by a mid-to-high teens percentage in the third quarter, while Bank of America expects its investment banking fees to fall at least 10%. Credit quality also matters: JPMorgan expects its card loss rate around 3.2% this year.
The bottom line is that rising rates are helping banks more than their depositors for now. Savers who move their cash can capture most of the Fed's increase themselves. This article is general information, not personalized financial advice.
