There is a number on your bank statement that almost nobody reads. It is the interest rate being paid on your cash. Saturday’s Journal printed a good reason to go look.
Most of us opened that account years ago, parked the emergency fund, and never thought about it again. Cash felt like the one part of the plan that took care of itself. It did not.
Rates on cash never send a letter when they drift. The statement just quietly keeps printing the same small number. That silence is the whole problem.
The number that froze
The Fed’s target rate — the benchmark that sets the price of money — sits at 3.50% to 3.75%. Over the past 52 weeks it has ranged between 3.50% and 4.50%. That is a full percentage point of travel.
Over those same 52 weeks, the average bank money-market yield ranged from 0.41% to 0.45%. It sits at 0.44% now. The whole year’s range is four hundredths of a point.
The three-year story is the same. The Fed’s 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.
Averages aren’t your account
Be careful with that 0.44%, though. 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 runs. 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. The only place to find your number is your own statement.
One more trap: two different products share a name. A bank money-market account is a deposit at a bank — that is the 0.44%. A money-market fund is an investment held at a brokerage — a different product entirely. Before you compare anything, find out which one you actually own.
Before you chase yield
The two-year Treasury yielded 4.208% in Saturday’s paper. Next to 0.44%, that gap looks like free money. It is not, and it is worth being honest about why.
A two-year Treasury is a two-year commitment. Sell it early and the price may have moved against you. Hold it to maturity and you must reinvest at whatever rates exist in 2028. That is a decision about time and access, not a free upgrade.
The five-year CD makes the point from the other side. The average pays 1.72% — the very top of its own 52-week range — for five years of lock-up. That is less than the two-year Treasury pays. Committing longer does not automatically pay more.
So the homework is modest. Find the interest line on your statement and read it. If it sits anywhere near that 0.44% average, that is worth a conversation — not a snap move made off a table describing 1,500 other banks. Bring the statement to your next review and we will look together.