Banks earn 3.90% at the Fed. Savers get 0.37%. The gap, measured

In September 2026 the average American savings account paid 0.37% a year. From September 17, 2026 the Federal Reserve has paid banks 3.90% on the reserves they hold at the Fed. On September 25, 2026 a one-year Treasury bill yielded 4.50%. Three numbers, three agencies — the FDIC, the Federal Reserve and the Treasury — and a gap of more than four percentage points between what a household is paid for its cash and what the same cash earns one step up the chain.

The gap is not new and it is not a scandal. It is how deposit pricing works. But it is measurable, and on $10,000 it is the difference between $37 and $450 a year.

What the FDIC's table says

Under 12 CFR 337.7 the FDIC publishes a “national rate” for each deposit product every month. It is defined 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 what the banking system as a whole pays, weighted by where the money sits.

Why deposits lag: the deposit beta

Nothing obliges a bank to pass a rate rise on to depositors. It sets its own deposit rate and changes it when not changing it would cost it deposits. The share of each policy-rate change that reaches depositors is called the deposit beta. A Federal Reserve staff note published April 12, 2024 defines it as “the change in the interest rate on deposits divided by the change in the federal funds effective rate.” A beta of one would mean full pass-through. A beta of zero would mean the bank keeps the whole increase.

The mechanism behind a low beta is inertia. Most deposits are held for payments and safety, not yield, and most depositors do not move them when rates change. A bank whose customers do not move has no pricing reason to pay more. A bank that has to attract deposits does. That difference, aggregated and weighted by deposits, is the 0.37%.

What the banks themselves earn

The other side of the ledger is set by the Fed and published on the day of each decision. The implementation note of September 16, 2026 directs the Board to “raise the interest rate paid on reserve balances to 3.90 percent, effective September 17, 2026.” That is the interest on reserve balances, or IORB — what any bank earns on money it leaves at the Federal Reserve overnight. The same note sets the overnight reverse repurchase rate at 3.75% and the primary credit rate at 4.00%.

What the rate cap is for

Alongside the national rate the FDIC publishes a “national rate cap”, and it is easy to misread. It is not a ceiling on what a healthy bank may pay. Under 12 CFR 337.7 it applies to an institution “that is not well capitalized,” which “may not solicit deposits by offering a rate of interest that exceeds the applicable rate cap.” The purpose is to stop a weak bank bidding for deposits with rates it cannot sustain, at the insurance fund's expense. The cap is the higher of the national rate plus 75 basis points or “120 percent of the current yield on similar maturity U.S. Treasury obligations plus 75 basis points or, in the case of any nonmaturity deposit, the federal funds rate plus 75 basis points.”

The distance between average and cap is itself evidence. The rule permits even an undercapitalised bank to pay 4.38% on savings. The average bank pays 0.37%. The average is where it is because of competition and inertia, not regulation.

The arithmetic on $10,000

The inflation figure is backward-looking: it is the price rise of the 12 months to August 2026, not the 12 months ahead. The September reading is due from the Bureau of Labor Statistics on October 14, 2026. The Treasury yield is a market price on one day. The calculation shows the three rates as they stood in the last week of September 2026; it is not a forecast of any of them. For the longer view, see inflation and your savings and the glossary entry on nominal versus real.

What it means for your money

The national rate is an average, not an offer. The number to compare it with is on your own statement. Three things are worth checking, none of which requires choosing a product.

• The APY, not the rate. Banks quote an annual percentage yield, which includes compounding within the year. Compare APY with APY.
• The date. The FDIC publishes monthly, the Treasury daily, the Fed eight times a year. A deposit rate quoted before September 16, 2026 was set against a policy rate that no longer exists. How to check a number is current sets out the method.
• The insurance. The FDIC states that its deposit insurance “covers $250,000 per depositor, per FDIC-insured bank, for each account ownership category,” and that it covers checking, savings, money market deposit accounts and CDs but not stocks, bonds, mutual funds or cryptocurrency. A Treasury bill is not a deposit and is not FDIC-insured; it is an obligation of the US government, and it can lose value if sold before maturity.

Where cash that has to stay cash should sit, and how much of it there should be, is a separate question, covered in the site's guide to where to keep an emergency fund and the glossary entry on the emergency fund. The point here is narrower: the gap between 0.37% and 4.50% is set by bank pricing rather than by regulation, and on a five-figure balance it is measured in hundreds of dollars a year.