Filed under → The Quarter Point
The Fed meets Wednesday and is expected to raise rates a quarter of a percent, its first hike in three years. On your savings that is worth a few dollars a year. The number nobody checks is what your own bank pays you, and that one is worth a lot more than a quarter point. Put yours in.
After Wednesday, cash parked at the Fed earns about 4.00% a year. Your money earns that whether or not any of it reaches you. This bar is that yield on your balance, cut in two.
A bank takes your deposit, lends it out or parks it, and earns roughly the Fed’s rate on it. What it pays you is a cost it would rather keep down. The gap is the margin, and at a bank the margin belongs to shareholders.
A credit union runs the same arithmetic with one difference: it has no shareholders, because the members are the owners. There is nobody else for the margin to go to. That is why the rates tend to be better, and the better rate is the symptom, not the reason.
So the honest version of this week’s news is not “rates went up.” It is your money got more valuable, and somebody decides how much of that you see.
Open your banking app and find the APY on your savings account. Most people have never seen this number. It is usually on the account detail screen, in small type, and it is usually 0.01%.
Check what a credit union near you pays on savings. You are not switching banks today. You are finding out the size of the gap so the decision stops being abstract.
You do not have to move your whole financial life. Move the emergency fund, the money that sits still and never gets touched. That is where the entire gap lives.
The Fed’s raise is your balance times 0.25%, the size of the expected hike. It is what a quarter point is worth on your money over a year if your bank passes the whole thing on to you. Most do not. Treat it as a ceiling, not a forecast.
The gap is your balance times the difference between 4.00% and what your bank pays you. 4.00% is the top of the federal funds target range after an expected quarter-point hike on September 16, 2026, from the current 3.50% to 3.75%. If the Fed holds instead, use 3.75% and every number here shrinks by about six percent.
Both figures are simple annual interest, before tax, with no compounding and no deposits. Real accounts compound, which makes the gap slightly larger, not smaller. Rounding is to the nearest cent under $1,000 and the nearest dollar above it.
This is a thinking tool, not advice. Rates move, offers vary, and deposit insurance limits apply at credit unions (NCUA) the same way they do at banks (FDIC). Nothing is stored and nothing you type leaves your browser.