US consumer prices rose 64.3% in the 20 years from August 2006 to August 2026. Over that time, $100 kept as cash lost value. By the end, it could buy only what $61 bought at the start.
A savings account pays interest to slow that loss. Since 2009, the average US savings account has paid less than inflation in almost every month. Here is how inflation erodes savings, how fast the loss builds and what an average account earned against it.
How much does inflation erode savings? Inflation erodes savings by the gap between the interest they earn and the rise in prices. Savings earning 0.37% a year while prices rise 3.4% lose about 3% of their buying power each year.
By August 2026, $100 held as cash since August 2006, earning nothing, could buy only what $61 bought at the start.
The average US savings account paid 0.37% a year in September 2026, according to the Federal Deposit Insurance Corporation (FDIC). Inflation is the rise in prices. In the year to August 2026 it was 3.4%, on the Consumer Price Index, the cost of a fixed basket of goods and services.
$10,000 in an average savings account from May 2009 grew to $10,282 by August 2026. After inflation, it bought what $6,564 bought in 2009.
What it means when inflation erodes savings
Inflation is the rise in prices across the economy. In the US, it is measured each month with the Consumer Price Index (CPI), the cost of a fixed basket of goods and services. Our guides explain what inflation is and how the CPI is measured.
When prices rise, each dollar buys less. That is a loss of buying power. Savings lose buying power whenever their interest rate is below inflation.
The gap between the two is the real interest rate, which is the interest rate after inflation. Roughly, it is the savings rate minus inflation. A savings account paying 0.37% a year, with inflation at 3.4%, has a real rate of about −3%.
How much buying power cash has lost to inflation since 2006
Source: FRED (CPIAUCNS); YX Insights
Chart 1 shows how much buying power cash earning nothing lost in each calendar year from 2006 to 2025. The loss was smallest in 2008, at 0.1%. Prices rose 4.7% from December 2007 to July 2008. They then fell 4.4% from July to December. The loss was largest in 2021, at 6.6%. 2022 came next, at 6.1%. Over those two years together, cash lost 12.2% of its buying power.
Over the whole span, from August 2006 to August 2026, prices rose 64.3%, or 2.5% a year. So $100 kept as cash had the buying power of $61 at the end. The loss grew faster in the second half. Cash lost 15.3% of its buying power in the first ten years. In the next ten, it lost 28.1% of what was left.
How inflation erodes savings over 10 and 20 years
The loss compounds. Each year's inflation acts on money that has already lost some buying power. The table shows what $10,000 can buy after 10 and 20 years, measured in the prices at the start, at three inflation rates. The last row adds interest of 0.37% a year, with inflation at 3.4%.
Inflation a year | Buying power of $10,000 after 10 years | After 20 years |
|---|---|---|
2% | $8,203 | $6,730 |
3.4% | $7,158 | $5,124 |
5% | $6,139 | $3,769 |
3.4%, with interest of 0.37% a year | $7,427 | $5,517 |
Source: YX Insights
At 2% a year, $10,000 keeps the buying power of $8,203 after 10 years. 2% is the inflation goal of the Federal Reserve, the US central bank. We explain that goal in Why Does the Fed Target 2% Inflation? At 3.4%, the rate in August 2026, $10,000 keeps $7,158 after 10 years. At 5%, it keeps $6,139.
After 20 years at 3.4%, about 1/2 of the buying power is gone. $5,124 is left. Interest of 0.37% a year slows this only a little. It leaves $5,517 after 20 years.
Savings account rates vs inflation since 2009
The FDIC is the US agency that insures bank deposits. Each month it publishes the average rate paid on savings accounts across US banks. Its record starts in May 2009.
Source: FRED (SAVNRNJ, SNDR, CPIAUCNS); FDIC; YX Insights
Chart 2 sets the average savings rate against inflation. The savings rate fell to 0.04% in March 2021. The Federal Reserve's main interest rate then rose from 0.08% in February 2022 to 5.33% in August 2023. The average savings rate rose only to a peak of 0.47%, first reached in January 2024.
From May 2009 to August 2026, there are 207 months with an inflation figure. October 2025 has none, because it was never published. Inflation was above the savings rate in 195 of those months. The 12 exceptions came in 2009 and 2015, when prices had fallen over the previous 12 months. The widest gap came in June 2022, with inflation at 9.1% and savings at 0.08%. Over the span, the savings rate averaged 0.16% a year. Prices rose 2.6% a year.
What $10,000 in a savings account was worth after inflation
Source: FRED (SAVNRNJ, SNDR, CPIAUCNS); YX Insights
Chart 3 puts $10,000 into an account paying the national average rate at the end of May 2009, with interest added each month. By August 2026, the balance was $10,282. Interest added $282 in 17 years and three months.
Over the same span, prices rose 56.6%. Keeping pace would have needed $15,664. Instead, the $10,282 bought what $6,564 bought in May 2009. That is a loss of 34.4% of buying power, or 2.4% a year.
How to check and protect savings against inflation
A few comparisons show how much a given pot of savings is losing:
Your rate against inflation. A rate below inflation means a negative real rate. The FDIC's national rates for September 2026 were 0.07% for checking accounts that pay interest. Savings accounts paid 0.37%. Money market deposit accounts, a type of bank savings account, paid 0.63%. Certificates of deposit, which lock money away for a fixed term, paid 1.73% for 12 months. All were below inflation of 3.4%.
Your account against the average. The national rate is an average across banks, so a single account can pay more or less than it.
Other places to hold cash. Three-month Treasury bills are loans to the US government that last three months. Our guide to how much cash a portfolio should hold covers what they earned against inflation.
Savings that track inflation. US Series I savings bonds pay a rate reset every six months from the CPI. For bonds bought from 1 May 2026 up to 31 October 2026, the rate is 4.26% a year, including a fixed 0.90%, according to TreasuryDirect. Each person can buy up to $10,000 a year. Treasury Inflation-Protected Securities (TIPS) are government bonds whose principal, the amount repaid, rises in line with the CPI.
Inflation erodes savings by the gap between their interest rate and the rise in prices. The average US savings account paid less than inflation in almost every month since 2009. So $10,000 saved in May 2009 kept only $6,564 of its buying power by August 2026.
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