Most savings accounts in the United States pay 0.38 percent. The FDIC's own rate cap for savings sits at 4.38 percent. That gap is the largest easy win in personal finance right now, and claiming it takes one afternoon.
The Federal Deposit Insurance Corporation publishes a national deposit rate every month. As of August 17, 2026, the national rate for savings accounts is 0.38 percent. Money market accounts pay 0.63 percent. A 12-month certificate of deposit pays 1.71 percent.
Those figures are averages across every insured institution in the country. They are pulled down by the enormous balances sitting in legacy branch accounts that nobody has revisited in a decade.
What the FDIC numbers actually measure
The FDIC defines the national rate as "the average of rates paid by all insured depository institutions and credit unions for which data is available, with rates weighted by each institution's share of domestic deposits." It is not a survey of the best offers, and it was never meant to be. The savings figure is based on the $2,500 product tier.
The FDIC also publishes a national rate cap. That is the ceiling a bank which is less than well capitalized may legally offer on deposits. For savings the cap is 4.38 percent. For a 12-month CD it is 5.65 percent.
The cap is not a promise that you can earn it. It is a useful reference point, because of how the FDIC calculates it. For maturity deposits such as CDs it is the higher of the national rate plus 75 basis points or 120 percent of the yield on similar-maturity Treasury obligations plus 75 basis points. For non-maturity deposits, which is what a savings account is, the FDIC uses the higher of the national rate plus 75 basis points or the federal funds rate plus 75 basis points.
In other words, the cap tracks what money actually costs in the open market. When the cap sits more than eleven times above the average, that tells you the average is not tracking the market at all.
Why the gap is this wide
The Federal Reserve cut its target rate three times in late 2025, on September 18, October 30 and December 11. Its own record of open market operations shows the target range at 3.50 to 3.75 percent from December 11, 2025, with no change recorded since.
Online banks compete for deposits and pass most of that rate through to customers. They have no branch network to fund and they win business on the number.
Large branch banks do not need to compete the same way. They hold checking and savings balances from customers who opened an account years ago, and those customers overwhelmingly do not move.
The result is a market where two federally insured accounts, with identical protection and similar access, pay wildly different amounts for the same dollar. The difference is not risk. It is inertia.
The math against points optimization
Here is why this belongs on a points site rather than a general finance blog.
Say you keep 10,000 dollars in cash for emergencies and near-term goals. At the national average of 0.38 percent, that balance earns about 38 dollars over a year. Assume for the sake of the arithmetic that you can find 4.00 percent, which is below the FDIC's 4.38 percent cap and is a rate you should verify against a specific account's stated APY rather than take from this page. At 4.00 percent the same balance earns about 400 dollars.
The difference is roughly 362 dollars, for money you were holding anyway.
Now compare that to spending optimization. Moving 10,000 dollars of annual spending from a 1x card to a 3x card earns 20,000 extra points. At one to two cents per point that is worth 200 to 400 dollars.
To capture it you have to track bonus categories, carry a second card, remember which one to use at the register, and do that consistently for twelve months. The savings move is worth about the same amount and you do it once.
This is not an argument against optimizing spending. It is an argument that the cash side of the stack deserves the same attention the points side gets, and in most households it gets none at all.
Our guide on building an emergency fund while earning credit card rewards covers the other half of that equation, which is how much cash to hold in the first place, and our emergency fund guide covers the target size.
The tax difference nobody mentions
There is a wrinkle that makes the comparison less lopsided than it first looks, and it runs in favor of points.
Interest income is ordinary income. Your 400 dollars of savings interest arrives on a 1099-INT and is taxed at your marginal rate. At a 24 percent federal rate that 400 dollars is really about 304 dollars, before any state tax.
Credit card rewards earned through spending are generally treated as a rebate rather than income, so they are usually not taxable. The same is not true of bank account bonuses, which typically do arrive as taxable interest.
Run the comparison after tax and the two levers land closer together than the headline numbers suggest. The savings move still wins on effort, because it is one decision rather than a year of small ones.
Where CDs and money market accounts fit
A 12-month CD at the national average of 1.71 percent still beats a 0.38 percent savings account by a wide margin, and competitive CDs pay considerably more than the average.
The tradeoff is access. An early withdrawal usually costs several months of interest, which makes a CD a reasonable home for money you are confident you will not touch. A tax payment due next spring fits. An emergency fund does not, because an emergency fund is defined by not knowing when you will need it.
Money market accounts sit between the two. They pay slightly more than savings on average, at 0.63 percent nationally, and often come with check writing or a debit card.
That suits money you touch a few times a year, such as an annual insurance premium or a planned home repair. It is not where your primary cash reserve has to live.
What to check before moving money
Confirm the institution is FDIC insured and look up its certificate number using the FDIC's BankFind tool. Standard coverage is 250,000 dollars per depositor, per insured bank, per ownership category.
Read whether the advertised rate is promotional. Some accounts pay a headline rate for three or six months and then quietly fall back to something ordinary, which puts you back where you started with extra paperwork.
Check the transfer mechanics before you need them rather than after. An external transfer that settles in three business days is fine for a planned expense and useless in a genuine emergency.
Many people solve that by keeping about one month of expenses at their everyday bank for instant access, and the rest somewhere that actually pays.
Look at whether the rate applies to the entire balance or only part of it. A few accounts pay well up to a threshold and poorly above it, which matters once your balance grows.
Finally, check for minimum balance requirements and monthly fees. A 4 percent rate with a 12 dollar monthly fee is worse than 3.5 percent with no fee on any balance under about 3,400 dollars.
Handling a larger balance
Once your cash exceeds the 250,000 dollar insurance limit, the calculation changes. Coverage is per depositor, per insured bank, per ownership category, so the same person can hold more than 250,000 dollars across different banks or different account structures and stay fully covered.
Joint accounts are insured separately from single accounts, which is how a couple can cover 500,000 dollars at one institution in a joint account plus their individual accounts.
Some institutions offer sweep networks that spread deposits across many partner banks to extend coverage. Read the terms on those carefully, because the money leaves the bank you opened with and the insurance depends on the network working as described.
Bank bonuses as a separate lever
Rate is not the only way cash earns. Checking and savings bonuses regularly pay several hundred dollars for moving money and meeting a direct deposit requirement, and they are often worth more in the first year than the rate difference itself.
We covered one current example in our Chase checking and savings bonus guide, which walks through the requirements and the timing.
The catch is that bonuses are one time and taxable, while a better rate compounds quietly for as long as the money sits there. The two are not alternatives. Chasing a bonus and then leaving the money at 0.38 percent afterwards is how most people give the gain back.
Treasury bills and money market funds
For larger balances there is a third option that many rewards-focused readers overlook.
Treasury bills are short term debt issued by the federal government, sold in terms from four weeks to one year. You can buy them directly through TreasuryDirect or through most brokerages, and they are backed by the full faith and credit of the United States rather than by deposit insurance.
The feature that matters most is tax treatment. Interest on Treasury securities is exempt from state and local income tax, though it remains subject to federal tax.
That exemption is worth real money in a high tax state. If you pay 9 percent state income tax, a Treasury yielding 4.00 percent leaves you with more after tax than a savings account paying the same 4.00 percent, because the state takes nothing from the Treasury interest.
Money market mutual funds work similarly and are sold by brokerages rather than banks. They are not FDIC insured, which is the tradeoff, though the government funds among them hold Treasury and agency debt.
For an emergency fund most people are better served by an insured savings account with instant transfers. For money with a known horizon of three months or more, the Treasury route often wins on both yield and tax.
Moving the money without drama
The mechanics trip people up more than the decision does.
Open the new account first and leave your existing account untouched. Fund the new one with a small test transfer, confirm it arrives and confirm you can pull it back, then move the rest.
Keep the old account open for at least one full statement cycle. Automatic payments and direct deposits attached to it will not move themselves, and discovering one after you have closed the account is a genuinely bad afternoon.
Update direct deposit last, once the new account has proven itself. Many bonuses require a direct deposit anyway, so this ordering serves two purposes.
What not to do
Do not lock your emergency fund in a CD to capture another half a percent. The whole value of that money is that it is available on the day something goes wrong.
Do not chase every small rate difference. Moving from 0.38 percent to 4.00 percent is transformative. Moving from 4.00 to 4.15 percent is worth 15 dollars a year on 10,000 dollars, and it costs you an afternoon and another set of login credentials.
Pick an institution with a track record of staying near the top of the market rather than one running a temporary promotion. Rate chasing is a hobby, not a strategy, and the people who do it well are optimizing a number that barely moves the total.
What the gap is worth at different balances
The dollar figures scale linearly, which makes the decision easy to size before you commit any time to it.
At 5,000 dollars the difference between 0.38 percent and 4.00 percent is about 181 dollars a year. At 25,000 dollars it is about 905 dollars. At 50,000 dollars it is roughly 1,810 dollars.
The same compounding that makes this worth doing is covered in our explainer on how compound interest actually works. Somewhere around 3,000 dollars the annual gain passes the point where an hour of paperwork is clearly worth it for most people. Below that the move still pays, it just competes with other uses of the same hour.
Run your own number before deciding. Multiply your typical cash balance by 0.036 and you have the approximate annual difference, which is usually enough to settle the question on its own.
The one action worth taking today
Look up what your current savings account actually pays. Most people cannot say from memory, and the number is usually on the monthly statement or one click into the account details.
If it starts with a zero, you have found several hundred dollars a year in exchange for about an hour of paperwork. That is a better hourly rate than almost any points strategy, and unlike a welcome bonus it repeats every year without another application.
Cash is the part of the stack that reward optimizers routinely ignore. It should not be, because it is the only part where the gain is guaranteed, federally insured, and requires no spending at all.
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