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When interest rates rise, short-term market rates face upward pressure—but the rate on your savings account or bank money market account may not rise immediately or by the same amount. A fixed-rate certificate of deposit (CD) usually keeps its stated rate until maturity, while a money market mutual fund’s yield changes over time and is not guaranteed. The right choice depends on when you need the money, how much rate certainty you want, and whether you are choosing a bank deposit or an investment.
How a Fed rate increase reaches cash products
The Federal Reserve uses the interest rate it pays banks on reserve balances to help implement monetary policy and guide the federal-funds rate into its target range. The Fed says an increase in the interest on reserve balances rate puts upward pressure on a range of short-term interest rates. That creates a path for higher rates on savings products and short-term investments, but it does not require a bank to raise its deposit rates immediately or by the same amount. The Federal Reserve explains the mechanism.
Each bank sets the rates and terms it offers on deposit accounts. The rate a customer actually receives can depend on the institution and account, so a Fed move alone does not tell you whether your own APY will change. Check the account’s current disclosure rather than assuming a particular pass-through.
How each product responds when rates rise
| Product | Rate behavior | Access and term | Protection and risk | What to check |
|---|---|---|---|---|
| Savings account | Typically variable; the bank sets the offered rate. | Generally liquid, subject to account terms. | Deposit insurance may apply at an eligible insured institution, within applicable legal limits. | APY, fees, minimum balance, withdrawal terms, and insurance status. |
| Money market deposit account | Typically variable; the bank sets the offered rate. | No fixed CD-style maturity; account terms govern access. | A bank deposit, distinct from a money market mutual fund. | APY, balance tiers, fees, transaction terms, and insurance status. |
| CD | May be fixed or variable, as stated in the disclosure. | Held for a stated maturity; early withdrawal may cost interest. | Eligible bank CD deposits may be covered within applicable insurance limits. | APY, term, maturity date, early-withdrawal penalty, issuer, and insurance. |
| Money market mutual fund | Yield changes over time and generally reflects short-term rates. | Fund-share redemption terms, fees, and liquidity provisions apply. | An investment, not an FDIC-insured deposit; investors can lose money. | Current yield, expenses, portfolio, fund type, NAV, and redemption terms. |
Savings accounts and bank money market deposit accounts
These are bank deposits, not investments in mutual funds. Their rates are generally variable, so a bank can change the offered rate under the account’s terms. A money market deposit account has no designated term that requires funds to remain until a maturity date, according to the FDIC. Review the account disclosure for its APY, fees, minimum balance, and access conditions. Banks must disclose rates, fees, and terms under the Truth in Savings Act. See the FDIC guide to deposit accounts.
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Certificates of deposit
A CD holds a fixed amount for a stated period. Its disclosure should identify whether the rate is fixed or variable, the maturity, how and when interest is paid, and any early-withdrawal penalty. A fixed-rate CD can preserve its stated rate during its term. If market rates rise after you open one, that certainty can mean missing an opportunity to reinvest at a higher rate until the CD matures; withdrawing early may trigger a penalty. Review the Investor.gov guide to CDs for details on their features and risks.
Money market mutual funds
A money market mutual fund is a mutual fund that invests in high-quality, short-term debt securities. Its dividends generally reflect short-term interest rates, so its yield can change as market conditions change. A rising-rate environment can therefore feed into fund yields, but the yield is not a promise to rise one-for-one with a Fed move.
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These funds may seek to maintain a stable net asset value (NAV), typically $1.00 per share, but that value is not guaranteed. Fees reduce returns, and longer-term securities can decline in value when rates rise. Money market mutual funds are not FDIC-insured deposits, and investors can lose money. Review the SEC’s money market fund investor bulletin before treating one as a place for cash.
Money market account vs. money market fund: the difference matters
“Money market” can refer to two different products. A money market deposit account is a bank account; a money market mutual fund is an investment fund. They have different protections, risks, and terms. Do not describe a mutual fund as insured bank cash simply because its name includes “money market.”
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- Bank money market deposit account: A deposit account with an institution-set rate and account-specific access terms. Deposit insurance may apply at an eligible insured bank within legal limits.
- Money market mutual fund: An investment in short-term debt securities. Its yield and value are not guaranteed, and it is not FDIC-insured.
What the FDIC’s national averages show—and do not show
The FDIC’s national-rate table reported the following averages on March 16, 2026:
| Product | FDIC national average on March 16, 2026 |
|---|---|
| Savings account | 0.39% |
| Money market deposit account | 0.56% |
| Six-month CD | 1.47% |
| Twelve-month CD | 1.52% |
These are national averages, not the best available rates, a particular customer’s APY, or a forecast. For these figures, the FDIC bases savings rates on a $2,500 product tier and averages money market and CD rates across the $10,000 and $100,000 product tiers. See the FDIC national-rate table for its rate data.
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How to choose when rates are rising
- Set the date you need the money. If you may need it at any time, consider access terms before locking money into a CD. For a known future need, compare CD maturity dates with that date.
- Compare the actual yield and its conditions. Check APY for bank deposits and the current yield for a fund, along with fees, minimums, and balance tiers. A headline rate is not the whole return or the whole set of terms.
- Decide how much rate certainty you want. A fixed-rate CD offers a stated rate for its term; a variable-rate deposit or fund yield can change. A fixed rate can protect against falling rates but may lag if rates rise.
- Check protection and risk. Confirm that a bank and account are eligible for deposit insurance and consider applicable coverage limits. For a money market mutual fund, review its portfolio, expenses, NAV objective, and redemption terms; it is an investment, not insured cash.
- Plan for what happens next. Check the CD’s maturity and renewal terms, or how a variable account’s rate can change. For a fund, understand that yield and investment value can vary.
What rising rates do not tell you
- They do not establish when a particular bank will change a savings or money market deposit account rate.
- They do not establish that any bank will pass through the full policy-rate change.
- They do not make a fixed-rate CD’s rate rise during its term.
- They do not guarantee a money market mutual fund’s yield, $1.00 NAV, or return.
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