The cost of a low rate
Savings accounts have paid about 2 points less than Treasury bills
Across all 4,313 FDIC-insured banks, the interest actually paid on savings and money market deposit accounts averaged about 1.72% from mid‑2025 to mid‑2026.[12] Over the same 12 months, 4-week Treasury bills averaged 3.75%.[10]
The FDIC's national average savings rate was 0.37% on September 21, 2026.[13]
U.S. households held about $6.6 trillion in savings and money market deposit accounts in mid‑2026.[14] At the gap above, that cash earns roughly $134 billion a year less than short Treasury bills.
Adding certificates of deposit and money fund expenses brings the estimate to $150 billion to $210 billion a year.
| Cash held | At 0.37% | At 1.72% |
|---|---|---|
| $8,000 (median family) | about $270 a year | about $160 a year |
| $50,000 reserve | about $1,690 a year | about $1,010 a year |
| $62,500 (average family) | about $2,110 a year | about $1,270 a year |
Interest given up each year at the FDIC national average savings rate (0.37%) and at the average rate banks actually paid (1.72%), compared with 4-week Treasury bills at their 3.75% average from October 2025 to September 2026. Family balances are transaction accounts in the Federal Reserve's 2022 Survey of Consumer Finances, the latest published.[15]
Bank rates include business depositors because household-only rates are not published.
Seven tests
What a cash reserve needs to do
- Federal backing you can name
Treasury securities carry the full faith and credit of the United States.[1] Bank deposits are FDIC insured up to $250,000 per depositor, per ownership category, at each bank.[3]
Money market funds hold government securities, but the funds themselves are not guaranteed or insured.[4] SIPC does not protect against a decline in value.[5]
- Stable value when you need it
A reserve should be worth what you put in on the day you need it. Longer Treasuries are federally backed but can be worth less if sold before maturity, as the research below shows.
- Fast access
Most brokerage sales settle one business day after the trade, the standard since May 28, 2024.[6] Savings accounts allow transfers on request.
- A competitive rate after taxes
Federal law exempts Treasury interest from state income tax,[7] and Missouri applies that exemption.[8]A Missouri household needs a bank rate about 0.2 point higher just to match a Treasury bill.
- A rate that lasts
We exclude promotional, introductory, and new-account-only rates, and any rate that depends on direct deposit or monthly deposits. We check whether existing customers earn the advertised rate.
- Within coverage limits
Above $250,000 at one bank in one ownership category, deposits are uninsured.[3] Treasury bills have no such limit.
- Simple to maintain, with low costs
Treasury bills can reinvest automatically at maturity.[2] Watch fees and minimums. Bill interest is generally taxed at maturity.[9]
Price risk
Why we keep the reserve in short Treasury bills
Longer Treasuries pay more today, but their prices move when interest rates change. We tested 6-month, 1-year, 2-year, and 3-year Treasuries on every trading day from January 1990 to October 2026, assuming the money had to come out after 3 or 6 months.[11]
Sold after 3 monthsSold after 6 months
Total return including interest earned, for every trading day from January 1990 to October 2026. Historical market data, not the results of any GTF client account.[11]
| Holding | Per 1 point rate move | Loss after 3 months | Worst 6 months, $50,000 |
|---|---|---|---|
| 6-month bill | about 0.5% | 1.5% of the time | no loss |
| 1-year bill | about 1.0% | 5% of the time | about $500 |
| 2-year note | about 1.9% | 14% of the time | about $1,755 |
| 3-year note | about 2.8% | 24% of the time | about $2,820 |
From 2016 to 2026, 1-year to 3-year Treasuries earned less than rolling short bills on average and trailed them more than half the time. In 2022, 2-year and 3-year notes trailed bills in 85% to 92% of 3-month periods, while 6-month bills barely moved.
Our approach: keep the emergency reserve in Treasury bills of 26 weeks or less, set to reinvest automatically, or in an FDIC-insured account that pays more after taxes. Money for a known purchase two or three years out can go in a Treasury that matures on that date.
Rates on October 1, 2026
Treasury bill rates
| Treasury bill | Market rate | Missouri tax-equivalent rate |
|---|---|---|
| 4-week | 3.96% | 4.16% |
| 13-week | 4.10% | 4.30% |
| 26-week | 4.28% | 4.49% |
Coupon-equivalent market rates from the U.S. Treasury, refreshed daily from Treasury's published data.[10] The tax-equivalent rate assumes Missouri's 4.7% top income tax rate. Rates change daily.
Citations
Our sources
- TreasuryDirect: Marketable securities
- TreasuryDirect: Treasury bills
- FDIC: Understanding deposit insurance
- SEC Investor.gov: Mutual funds
- SIPC: What SIPC protects
- SEC Investor.gov: T+1 settlement bulletin
- 31 U.S.C. 3124 (Cornell LII)
- Missouri Revised Statutes 143.121
- IRS Publication 550
- U.S. Treasury: Daily bill rates
- U.S. Treasury: Daily par yield curve
- FDIC BankFind: Bank financial data
- FDIC: National rates and rate caps
- Federal Reserve: Financial Accounts (Z.1)
- Federal Reserve: Survey of Consumer Finances
This article is general education based on public market data and GTF's analysis of it. It does not show the results of any GTF client account, and past results do not guarantee future results.
Rates are as of the dates shown and change often. Treasury securities sold before maturity can lose value. Money market funds are not FDIC insured.
This is not a recommendation for any particular household. Your reserve depends on your spending, income, and plans.