More Americans hold onto cash as interest rates reward savers

New research shows Americans are keeping more money in interest-bearing accounts, even as prices remain high. A report from JPMorgan Chase analyzing 4.5 million accounts found that overall cash balances are up — a sign of how higher interest rates are influencing personal finance habits.

"It's not a surprise," said Steve Wyett, chief investment strategist at BOK Financial. "The economy is bigger, and there's more cash in the banking system overall."

Wyett said higher interest rates are now benefiting savers after years of near-zero returns. "We went through a 15-year period where it didn’t matter what you did with your money," he said. "Now it matters."

Why People Are Saving More

Wyett noted that saving patterns differ depending on income levels. While inflation has driven up costs, interest-bearing accounts — like money markets, CDs and brokerage accounts — offer ways to earn returns that can help offset those increases.

"Cash is a bit of a defensive holding," Wyett said, pointing to economic uncertainty as another reason people may choose to hold liquid assets instead of investing long-term. "They want to have more flexibility."

Money market funds are one short-term option offering easy access and modest returns. CDs typically offer higher rates in exchange for locking in funds over time, and brokerage accounts often include cash-earning components alongside investments.

Watching Interest Rates Ahead

Interest rates have become a political issue in an election year, with some calling for aggressive cuts. But Wyett believes any changes from the Federal Reserve will be small.

"There are a lot of things going," he said. "By the end of the year you’ll see interest rates down some, but we’re talking 25 or 50 basis points—not a huge move."

For now, savers can take advantage of the current rate environment, especially compared to the financial repression era that followed the 2008 financial crisis.