Consumer spending remains strong in the U.S., even as inflation holds at 2.7% and checking and savings balances decline. So, where’s the money coming from?
New research from JPMorgan Chase’s Household Finances Pulse analysis may offer an answer.
Analyzing data from 4.7 million households, the study found that while traditional bank balances have stagnated, total cash reserves — including money market funds, brokerage accounts, and certificates of deposit (CDs) — are growing 3% to 5% annually in 2025.
The biggest gains are among lower-income households, with those in the lowest income quartile seeing 5% to 6% growth in total cash reserves.
This shift toward higher-yield accounts may help explain why consumer spending remains resilient, despite economic headwinds.
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Where are Americans putting their money?
Instead of parking funds in checking or standard savings accounts, many households are turning to investment-style options with higher returns. If you’re considering a similar move, here are a few of the most popular alternatives:
High-yield savings accounts (HYSAs): These work like traditional savings accounts but offer higher interest rates — often between 4% and 5% APY as of mid-2025 — often offered by online banks with lower overhead.
Certificates of deposit (CDs): CDs lock your money in for a fixed term in exchange for a guaranteed return. Rates vary by term but can exceed 4% for longer durations.
Money market accounts (MMAs): Offered by banks, MMAs combine savings features with limited check-writing abilities, FDIC insurance, and competitive yields — though often slightly below HYSAs.
Money market funds (MMFs): These are investment products, not bank accounts. While not FDIC-insured, they invest in low-risk, short-term securities and are considered a stable alternative to cash.
Brokerage accounts: These accounts allow you to invest in stocks, ETFs, and mutual funds. While more volatile, they offer higher long-term growth potential.
Retirement accounts (401(k)s, IRAs): Though designed for long-term saving, increased contributions to these tax-advantaged accounts suggest many households are focused on future financial security.
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What to consider when choosing an investment vehicle
While chasing higher yields can make sense, it’s important to weigh your financial goals, risk tolerance, and liquidity needs before making a move. Here are a few factors to keep in mind if you’re considering moving money to an investment account:
Purpose of the funds: Are you saving for an emergency, a home, or retirement? Liquid needs (like an emergency fund) should stay in accessible, low-risk accounts like a HYSA or MMA. Funds you won’t need for a year or more could go into CDs, while longer-term goals (more than five years) may be better suited for brokerage accounts invested in stocks or bonds.
Risk tolerance: Investments like stocks carry market risk. You risk losing value if you’re forced to sell during a downturn. If protecting your principal is top priority, consider lower-risk options like CDs or MMFs, keeping in mind that MMFs are not FDIC-insured.
Liquidity needs: Some products, like CDs, charge penalties for early withdrawals. If you might need quick access to your funds, choose options that keep your money available. A CD ladder — holding multiple CDs with staggered maturity dates — can help balance yield and liquidity.
Americans continue to adapt to economic pressures. While inflation still erodes purchasing power, the rising use of high-yield financial tools may be helping households preserve — and even grow — their cash reserves.
Whether this marks a long-term shift in consumer behavior remains to be seen. For now, it remains a quiet force helping to keep the economy afloat.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
