More Americans shift money from checking and savings to accounts with investment income

New findings show that more Americans are reallocating their funds from traditional checking and savings accounts into higher-yield financial vehicles—such as brokerage accounts, money market funds, and certificates of deposit—an emerging trend that may help explain the continued strength of the U.S. economy despite elevated inflation and tariff-related uncertainties.

The research, conducted by the JPMorgan Chase Institute, analyzed financial data from 4.7 million households and revealed that overall cash reserves are growing when these investment-linked accounts are factored in. While inflation-adjusted balances in checking and savings accounts remain low and show little growth, total cash holdings have been climbing since mid-2024, returning closer to long-term growth patterns once investment-related assets are included.

“Families across many income bands are now seeing a turnaround in their total cash,” said Chris Wheat, president of the institute.

Wheat noted that consumer spending had previously appeared disconnected from stagnant checking and savings growth—a puzzle now better understood through Americans’ shift into interest-bearing accounts amid a higher-rate environment. He emphasized that this behavior seems to reflect a strategy of actively managing liquid cash rather than making longer-term investments.

However, he cautioned that this trend may be temporary. The institute has yet to determine whether the current shift in savings behavior will hold over the longer term.

The study also highlighted how households with annual incomes below $35,000 have seen their total cash balances grow at an annual rate between 5% and 6%. Among this lowest income quartile, checking and savings account balances average just above $1,000, while median balances among the highest earners exceed $8,000.