The Savings Rate Gap: what the national average costs you

Every month the FDIC publishes what American deposit accounts actually pay, and every month that number sits far below what monetary policy would suggest. This page tracks the distance between the two, converts it into dollars, and keeps a running record. It is updated when the FDIC publishes new rate data, normally around the 15th to the 20th of each month.

The reason to track it is simple. Most personal finance coverage tells you that rates are high or that rates are falling, as though there were a single rate. There is not. There is what the Federal Reserve sets, and there is what your bank pays you, and the space between those two numbers is the single largest, most reliably ignored line item in American household finance.

The gap right now

Measure	Rate	Source date
FDIC national average, savings	0.38%	July 20, 2026
FDIC national average, money market	0.65%	July 20, 2026
Federal funds target range	3.50%–3.75%	Since before June 17, 2026
Effective federal funds rate	3.63%	July 23, 2026
The gap (policy floor − savings average)	3.12 pp	July 2026

The effective federal funds rate is more than nine times the national average savings rate. Put differently: for every dollar of yield the policy rate makes available on overnight money, the average American savings account passes along about eleven cents.

We measure the gap against the bottom of the target range, 3.50%, rather than against the effective rate. That is the conservative choice — it understates the gap by about a tenth of a point — and it keeps the series stable when the effective rate drifts within the range.

What the gap costs, by balance

At a gap of 3.12 percentage points, held for one year, before tax:

Balance	Annual cost of the gap
$1,000	$31
$5,000	$156
$10,000	$312
$25,000	$780
$50,000	$1,560
$100,000	$3,120

These are not projections or estimates of what you might earn with a better bank. They are the arithmetic difference between two published rates, applied to a balance. Whether you can capture the full gap depends on what accounts are available to you, and the honest answer is usually that you capture most of it but not all.

For context on scale: a household with $25,000 in an average savings account is giving up roughly $780 a year. That is more than twelve times what a quarter-point move by the Federal Reserve would change on the same balance ($62.50). The bank you choose matters an order of magnitude more than what the Fed does, and it is the variable entirely within your control.

Why the gap exists

It is tempting to read a 0.38% national average as evidence that banks are simply not passing on rate increases. That is broadly true, but the mechanism is worth understanding, because it tells you which accounts will and will not reprice.

Deposit beta. The share of a policy rate change that reaches depositors is called the deposit beta. For institutions with large branch networks and sticky retail deposits, it has stayed close to zero through this cycle. A bank funded cheaply by customers who do not move has no commercial reason to bid up its own funding costs. Banks without that luxury — online-only institutions and those competing for deposits — run much higher betas, which is exactly why the dispersion between the best and worst accounts is so wide.

The average is branch-weighted. The FDIC calculates these averages across insured institutions weighted by branch, so the very large banks dominate the figure. The national average is therefore not “the typical account” so much as “what the biggest banks have decided to pay”. A saver reading 0.38% should not conclude that this is what is available; they should conclude that this is what most people are accepting.

Inertia is the product. From the bank’s perspective, the gap is not a failure. It is revenue. Every month a customer leaves money in a 0.38% account while the institution earns the policy rate on it is a month of margin. Nothing about that is illegal or even unusual — it is simply a transfer that only happens if the depositor does not act.

The deposit curve is inverted

The July 2026 FDIC data contains a second signal, and it is the one worth reading if you are deciding between locking money up or keeping it liquid:

CD term	National average
3 month	1.15%
6 month	1.38%
12 month	1.68%
24 month	1.56%
60 month	1.36%

Yields rise out to twelve months and then fall. A five-year CD averages less than a one-year CD — an inverted deposit curve.

Banks price term deposits off where they expect rates to be across the life of the term. An inverted curve is therefore the banking system saying, with its own money, that it does not expect today’s rates to persist for five years. That is a more honest forecast than anything you will read in a press release, because the institution making it has to fund the position.

The practical reading: locking up money for five years at today’s averages means accepting a lower rate in exchange for taking duration risk, which is the wrong side of that trade. The short end is where the deposit market is paying, which argues for laddering rather than reaching for term. Our CD ladder guide covers the mechanics, and the HYSA versus CD break-even calculator puts your own numbers through it.

Methodology

Anyone should be able to reproduce this, so here is exactly how it is built.

1. Savings and CD averages come from the FDIC’s National Rates and Rate Caps, published monthly. The FDIC calculates them across insured institutions weighted by domestic branch, based on rates available as of the last business day of the prior month.
2. The federal funds target range comes from the most recent FOMC statement; the effective federal funds rate and the bank prime loan rate come from the Federal Reserve’s H.15 release.
3. The gap is the bottom of the target range minus the FDIC savings average, in percentage points.
4. The dollar cost is the balance multiplied by the gap, simple interest, one year, before tax. No compounding is assumed, which slightly understates the figure.
5. Update cadence: when the FDIC publishes, normally between the 15th and the 20th. The prior month’s reading is retained below rather than overwritten, so the series accumulates.

Where a figure changes, the previous value stays in the record. Nothing on this page is modelled, projected, or sourced to a rate-comparison site.

The record

Month	FDIC savings avg	Fed funds floor	Gap	Cost per $10,000
July 2026	0.38%	3.50%	3.12 pp	$312

This series begins in July 2026 and extends by one row each month.

Using this data

The figures on this page are compiled from US federal sources and may be quoted freely, with attribution to finbarrow.com and a link to this page. If you are a journalist or researcher and need the underlying month-by-month numbers, or a figure checked before publication, write to [email protected] — corrections are welcome and will be recorded here rather than quietly edited.

What to do about your own gap

Closing the gap is a single afternoon of administration, and then it is closed permanently. Three places where the money usually sits:

• A legacy savings account at a large branch bank. This is where the 0.38% lives. Moving it is a transfer, not a product decision.
• A brokerage cash sweep. Often the worst-paying option on the menu and the one nobody checks, because it is a default rather than a choice — see brokerage cash sweep optimization.
• A checking account carrying more than it needs. Whatever exceeds a month of expenses is doing nothing where it is.

The one thing worth internalising from all of the above: the number that determines what your cash earns is not set in Washington. It is set by which institution is holding it, and that is a decision you make once.