Since the Great Financial Crisis (hard to believe that it was 15 years ago), we have become accustomed to earning little interest on cash in our bank accounts. Thanks to the Federal Reserve’s zero interest rate policy, savers have suffered.

Over the past 12 months, Fed policy has shifted drastically to combat high inflation. With the Fed hiking interest rates aggressively to 4.75%, savers can now earn a decent interest rate.

The good news: Today, you can earn more on your cash balances.

The bad news: Our research shows that many of the nation’s big banks are not paying customers but keeping the profits for themselves.

Where you keep your cash matters.

Do you know your interest rate?
Let's take a look at what banks are offering.

Today, bank deposits are a staggering $17.65 trillion; yet, the biggest banks are paying next to nothing in terms of interest. While some banks pay more if you have more cash deposited, their rates are still paltry. For example, if you have $1 million at Bank of America, you’ll earn just 1.01%.Come on. As Tom Cruise screams in Jerry Maguire, “Show me the money!”
So what are the better options?

I love finding little things that can make a big difference. Here’s an example.

If you don't need the money right away, you can buy a 6 month or 12 month US Treasury Bill that pays over 5% interest. That means if you have $100,000 in a savings account at Chase, you would earn just $10 in one year compared to $5,000 in a US Treasury Bill!

If you need to access your cash, a money market fund is also a better alternative than a bank. Fidelity and Vanguard money market funds are currently paying over 4.2%. If your account is at Fidelity or Vanguard, you may need to change your core position for uninvested cash to a higher yielding money market fund. Switching costs you nothing and does not affect how you currently use your account.

With the ease of transferring money electronically between financial institutions, don't allow any bank to short change you on interest.

It pays to take the steps to transfer your funds to higher paying, safe instruments that earn 4-5%.

We have done this for our clients. If you need help finding higher interest rates for your cash deposits, please reach out. We are happy to help.

Feature image from Unsplash