There is a number on your bank statement that almost nobody looks at. It is the interest rate being paid on your cash.
Most of us opened that account years ago, moved the emergency fund into it, and never thought about it again. Cash felt like the one part of the plan that took care of itself.
Saturday’s Journal ran its box of consumer rates. It is a good reason to open the statement and look.
The number that didn’t move
Saturday’s table shows the Fed’s target sitting at 3.50% to 3.75%. Over the past 52 weeks that target has ranged between 3.50% and 4.50%. That is a full percentage point of travel in the benchmark that sets the price of money.
Over those same 52 weeks, the average bank money-market yield ranged between 0.41% and 0.45%. It sits at 0.44% now. The whole year’s range is four hundredths of a point.
The three-year columns tell the same story. The funds target is down 1.50 points over three years. The average money-market yield is down 0.11. The benchmark moves in points; the deposit average moves in hundredths.
An average is not your account
Be careful with that 0.44%. It is an average from Bankrate’s survey of more than 1,500 online banks. It is not the rate at any one bank, and it is certainly not a statement about yours.
The same page shows how wide the spread can run. On a new-car loan, the Bankrate average was 6.95%, while First Command Bank in Fort Worth posted 4.99%. An average is a middle. Some institutions sit well to either side of it. The only place to find your number is your own statement.
A bank money-market account is a deposit at a bank. That is the 0.44% average in the Journal’s table.
A money-market fund is an investment you would typically hold at a brokerage. It is a different product, and Saturday’s paper does not carry fund yields, so we are not quoting one here.
They sound alike and get muddled constantly. Before you compare your cash to anything, find out which one you actually own.
Before you chase the Treasury
The two-year Treasury yielded 4.208% in Saturday’s paper. Set beside a deposit average of 0.44%, the gap looks like free money. It isn’t, and it is worth being honest about why.
A two-year Treasury is a two-year commitment. Your cash account is liquid and its value doesn’t wobble. Sell a Treasury before it matures and the price may have moved against you; hold it to maturity and you then have to reinvest at whatever rates exist in 2028. Choosing between them is a decision about time and access, not a free upgrade.
The five-year CD average makes the point from the other side. It pays 1.72%, and that figure sits at the very top of its own 52-week range of 1.67% to 1.72%. Five years of lock-up, for less than the two-year Treasury yields. Committing for longer does not automatically pay you more.
So the general principle is a modest one. Cash is the part of a plan that quietly goes unexamined for years, and the rate on it does not announce itself when it drifts. Find the interest line on your statement and read it. If it is somewhere near that 0.44% average, that is worth a conversation — not a snap decision, and not a move made off a number in a newspaper that describes 1,500 other banks rather than yours. Bring the statement to your next review and we will look at it together.
The cash line deserves a look on plans where it hasn’t been reviewed in a while. The Fed’s target is 3.50%–3.75%; Bankrate’s average bank money-market yield is 0.44% and has sat between 0.41% and 0.45% all year. For households whose cash is earning near that average, the gap is worth raising — but treat it as a question to check on a statement, not an assumption to make about everyone. Some banks pay well above the average, and the paper’s own new-car panel (6.95% average vs. 4.99% at First Command Bank) shows how wide that spread runs. If a client raises the two-year Treasury at 4.208%, name the trade-off out loud: it is a two-year commitment with price risk if sold early and reinvestment risk at maturity — a duration decision, not a free upgrade. And the five-year CD average of 1.72% sits at the top of its own 52-week range while still paying less than the two-year, so length by itself is not compensation. Ask clients to bring the cash statement to the next review. Dividends & Income chip stays hot.