Your Savings Account Pays 0.38%. The FDIC's Own Table Says 4.38% Wouldn't Be Out of Line.

If your cash is sitting in a plain savings account, last week’s Fed decision did nothing for you. It did plenty for the bank holding it.

The Fed raised its target range by a quarter point on September 16, to 3.75 to 4 percent, on a 12 to 0 vote. By the next day the prime rate banks charge their best borrowers had gone from 6.75% to 7.00%. The Fed’s own H.15 release logged the move as effective September 17.

One day to reprice the lending side.

Now the deposit side. The FDIC publishes a national average savings rate on the third Monday of every month. The current table says 0.38%.

The number one column over

Here’s the part nobody quotes. On that same FDIC table, one column to the right of the average, the regulator prints a “national rate cap” for savings: 4.38%.

That cap isn’t a goal. It’s a leash. The FDIC uses it to stop a weakly capitalized bank from buying deposits by outbidding everyone in its market. For an account you can pull money out of at any time, the cap is the higher of the national average plus 0.75 points, or the federal funds rate plus 0.75 points. Right now the funds rate wins, so the ceiling lands at 4.38%.

Translation: a bank the FDIC has flagged as less than well capitalized can pay you 4.38% on savings before any regulator calls it aggressive. The average bank pays 0.38%.

Why is the average down there? The FDIC weights it by each institution’s share of domestic deposits. A few very large banks hold most of the country’s cash and pay close to nothing on it, so they set the average almost by themselves. The figure isn’t a menu of what you can get. It’s a map of where the money actually sits, and most of it is sitting still.

What the gap costs

Put $10,000 against it. A year at 0.38% pays you $38.

Ally’s online savings account posted 3.00% on September 18, on its own rate page, the same rate across every balance tier. A year there pays about $300.

That’s $262 for one transfer. On $40,000 it’s about $1,048.

Nothing about that is complicated, which is exactly the bet. Banks are counting on the gap being too dull to act on.

Do this now

Open an account at a bank that publishes a real rate, link it to your checking, and move the cash you aren’t spending this month. Keep your checking where it is if you like the branch. Nobody has to close anything.

Then put a reminder on your calendar for January. These are variable rates, and the bank leading the table today isn’t obligated to lead it in four months. Our savings calculator shows what the spread does over a few years, and our best savings accounts page is the shopping list.

The rest of the FDIC table prices the whole menu: interest checking at 0.07%, money market at 0.63%, a 12-month CD at 1.71%. The savings and checking figures cover the $2,500 tier.

One more thing about the timing. That table is dated August 17 and built on July’s last business day, so last week’s hike isn’t in it yet. The next update posts Monday. The cap will rise, because the funds rate did. The average will barely budge.

It never does.

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