Americans' Financial Savvy Soars as Money Market Funds and CDs Surge

Money market funds in the US have been paying over 5% since April 2023, prompting Americans to flock to them. In response, banks are now competing for deposits by offering attractive interest rates on certificates of deposit (CDs). Large CDs of $100,000 or more have surged by 60% since the Federal Reserve began its rate hikes, reaching $2.1 trillion at the end of October. Small CDs of less than $100,000 have also seen a significant increase, rising from $36 billion in May 2022 to nearly $1 trillion by the end of September. Banks are also offering higher interest rates on savings accounts to compete with money market funds.