Short-term interest rates have risen at the fastest pace in years, reaching levels that we have not seen in over a decade. But the big banks have been slow to raise their savings rates. (UBS)

But what may be even more provocative than the fact that these participants were willing to divulge their balances is that they are keeping so much money in low-interest accounts and missing out on higher-yielding alternatives.

Where’s the money?

Americans are flush with cash. Since the start of 2020, about $425 billion has flowed into savings and money market accounts at commercial banks, according to the FDIC. But at the same time, they’re missing out on about $291 billion in accumulated interest by not moving their savings into the top five highest-yield savings accounts.

On average, these banks paid 0.4% interest in savings and money-market accounts. However, according to data from, the highest-yielding savings accounts paid an average of 2.14% over the same period. So why aren’t more moving their money?

“One reason that families have so much cash in checking accounts is the status quo bias,” said Justin Waring, Investment Strategist in the UBS Chief Investment Office (CIO). ”After more than a decade of near-zero interest rates, many families have grown accustomed to getting paid a minimal amount of interest on their checking and savings cash.”

Also, opening a new account can take time and many of the big banks don’t make it easy to switch. In fact, the conveniences of user-friendly banking technology have lulled many people away from switching out of low-interest accounts.

“For some,” said Katie Williams, Discovery Strategist, CIO, “comfort may be defined by easy access and liquidity, versus additional income.”

US investors are catching on

Short-term interest rates have risen at the fastest pace in years, reaching levels that we have not seen in over a decade. But the big banks have been slow to raise their savings rates. And consumers aren’t waiting around: people are moving a record amount into higher-yielding savings as they grow more aware.

At UBS, higher interest rates have brought an improvement to our Liquidity strategy opportunity set, with higher yields for a wide variety of Liquidity strategy solutions.

According to Ainsley Carbone, Total Wealth Strategist, CIO: “If you're willing to take on slightly more liquidity risk, the extra yield might not make a huge difference in any one year, but it can add up over the long run, helping you to improve purchasing power.”

A Liquidity strategy for lifting yields

Those at Art Basel looking to climb the ATM leaderboard may want to take note: having a large amount of cash in your checking account could be a sign of poor financial management, not a sign of wealth. CIO recommends that you set up a Liquidity strategy that is funded with resources for the next 3-5 years of portfolio withdrawals, and that you invest the rest of your wealth in longer-term investments.

When it comes to investing your Liquidity strategy assets, CIO recommends using a core-satellite approach to capture the return opportunities accessible across different holding periods.

  • Bond and CD ladders are at the core of the Liquidity strategy, allowing you to generate income while immunizing your portfolio from future rate moves and have the proceeds align with the cash flow needs when they mature. With 1- to 3-year yields above 4% for the first time since 2007, bond ladders are once again a viable solution for protecting your family's purchasing power. Ladders are most appropriate for earmarking assets for planned spending with a known time frame and dollar amount.

As a complement to bond and CD ladders, to further help protect your purchasing power in the Liquidity strategy, we recommend investing in satellite strategies. These strategies can help you to tap into growth and yield opportunities in exchange for taking on more liquidity, credit or counterparty risk. Satellite Liquidity strategy solutions also offer help for investing resources earmarked for spending that is not planned or scheduled ahead of time:

  • UBS Bank USA Core Savings* (UBS Core Savings) is FDIC-insured (up to applicable limits) and can help UBS clients with a UBS brokerage account earn a competitive yield on short-term cash needed for planned or unexpected expenses while keeping their long-term investment strategy on track. In addition to the higher yields, clients with deposits in UBS Core Savings can enjoy:
    • No market or liquidity risk. Limited credit risk.
    • More flexibility than term deposits like Certificates of Deposits
    • Easy access to their cash with self-service deposit and withdrawal capabilities on UBS Online Services and the UBS Financial Services app.

  • Managed Income Solutions Core, Select Investment Grade Corporate Credit Ladders, and the UBS US Ultra Short Bond SMA are all viable options for enhancing the growth and income potential of your Liquidity strategy assets—especially those that you don’t need to tap into for a few years.

In today’s volatile environment, higher-yield opportunities can do a lot more for making an art of your account performance.

Main contributor: Erin Sanders

For more, see the blog Liquidity strategy: A rising tide lifts all yields 26 September 2022.

*About UBS Bank USA

UBS Bank USA is a member of the Federal Deposit Insurance Corporation (FDIC). Funds on deposits at UBS Bank USA are eligible for deposit insurance from the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 (including principal and accrued interest) for each insurable capacity (e.g., single, joint, corporate, etc.) in which you hold the deposits. For purposes of FDIC insurance, your deposits will be aggregated with your other deposit balances held in the same insurable ownership capacity at UBS Bank USA, including any certificates of deposit, UBS Bank USA Core Savings deposits and deposits held through the UBS Bank Sweep Programs and the UBS FDIC Insured Deposit Program. You are re sponsible for monitoring the total amount of deposits at UBS Bank USA in order to determine the extent of FDIC deposits insurance coverage. For more information about FDIC insurance, please visit the FDIC website at s .

Please carefully review the UBS Bank USA Core Savings Disclosure Statement available at UBS Bank USA Core Savings deposits are made through an account at UBS Financial Services Inc. UBS Financial Services Inc., as your agent and custodian, will open a deposit account with its affiliate bank, UBS Bank USA. UBS Bank USA Core Savings is not available for certain financial institutions, advisory accounts and non-resident aliens. Ask your UBS Financial Advisor for more information.

UBS Bank USA Core Savings is not intended for clients who need to have frequent access to their funds. UBS Financial Services Inc. will charge you a fee of $25 for each withdrawal that you make from UBS Bank USA Core Savings in excess of five (5) withdrawals in a calendar month. Applicable fees may reduce your earnings. For these purposes, a withdrawal will be considered to occur on the day on which the funds are actually withdrawn from UBS Bank USA Core Savings, which may not be the same day on which you place an order for the withdrawal with your Financial Advisor. These fees will be posted to your account at UBS Financial Services Inc. the business day following the excess withdrawal. You may incur a withdrawal fee even if the withdrawal is involuntary such as if a withdrawal is made by UBS Financial Services Inc. to meet a margin call.

UBS Bank USA is a subsidiary of UBS Group AG. UBS Bank USA, Member FDIC, NMLS no. 947868.

About UBS Financial Services Inc.

The Resource Management Account, Business Services Account BSA and International Resource Management Account are brokerage accounts with UBS Financial Services Inc., a registered broker-dealer and a Member of the Securities Investor Protection Corporation (SIPC), which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). An explanatory brochure is available upon request or at The RMA account provides access to banking services and products through arrangements with affiliated banks and other third-party banks, and provides access to insurance and annuity products issued by unaffiliated third-party insurance companies through insurance agency subsidiaries of UBS Financial Services Inc.

Investment, insurance and annuity products: Not FDIC insured ● No bank guarantee ● May lose value

UBS Financial Services is a subsidiary of UBS Group AG. Member FINRA. Member SIPC.

This material has been prepared for informational purposes only and is not an offer to buy or sell, or a solicitation to buy or sell, a CD or to participate in any trading strategy. The CDs discussed may not be suitable for all investors and will depend on individual investors’ circumstances and objectives. You should carefully review the CD Disclosure Statement, any supplement to the Disclosure Statement and your trade confirmation for the terms of their CD, including the time periods when the Issuer may call the CD.

Review code: IS2300297