3 min read
2025-09-19
Fed cut rates twice in late 2025. Practices should be earning 1.5-2% on operating cash and 4%+ on reserves. Here's how to tell if your bank is keeping up.
The Fed cut rates twice in late 2025. As of early 2026, the Fed Funds rate sits around 3.75%. Treasury yields hover near 4%. Your bank should reflect that. Many don't.
Here's what APY a medical practice should actually expect this year.
The 2026 Baseline
By account type, here's what's reasonable in early 2026:
Checking at a generalist big bank: 0.01-0.05%
Healthcare-native business operating account: 1.5-2%
High-yield business savings: 3-4%
T-bills (4-week): 4.0-4.4%
Brokered CDs (3-12 month): 4.2-4.8%
IntraFi Cash Service (sweep with yield): 1.75-3.5%
These ranges will move with the Fed. The relative gaps between account types stay roughly the same.
What You Should Be Earning
A typical 5-location practice with $2M in pooled cash should be looking at $70K-$90K of annual yield in 2026. That's 3.5-4.5% blended.
If you're earning under $20K on $2M, you're at a generalist bank. The gap is real money.
Why the Gap Is Widening
Generalist banks raise deposit rates slowly. They benefit when the Fed raises and they pay you the same 0.05%. They cut rates fast when the Fed cuts.
Healthcare-native and challenger banks pass more of the rate through. The competitive pressure is different. They aren't subsidizing branches and ATMs you'll never use.
In 2024-2025, the spread between "best" and "average" widened. In 2026, it's normal to see 200-400 bps difference between a sleepy big-bank checking and a tuned operating account.
How to Benchmark Your Bank
Run this quick comparison:
Pull your last 12 months of interest income from your bank statements
Divide by your average daily balance
Compare to the Fed Funds Effective Rate for the same period
If your effective yield is more than 200 bps below Fed Funds, you're paying for it. If it's more than 300 bps below, switch.
What to Do About It
Three actions, in order:
Ask your current bank what their 2026 operating account APY is, in writing
Get a quote from a healthcare-native bank with multi-entity support
Set up a bucketed cash strategy: operating, reserve, strategic
Lemma's operating account pays 1.75% APY with no minimums and full FDIC coverage through IntraFi.
What Drives Bank Pricing in 2026
Three forces will shape APY this year:
The Fed's pace. Rate cuts compress yield across the board. Rate holds protect it.
Deposit competition. Challenger banks are aggressive on price. Big banks aren't.
Loan demand. Banks pay more for deposits when they need them to fund loans. Right now, demand is moderate.
If the Fed cuts another 50 bps, expect operating account APY to drift toward 1.25-1.5%. T-bills will follow. Plan for that range when modeling 2026 yield.
A Note on Promotional Rates
You'll see banks advertising 5% or 6% APY. Read the fine print:
Many cap at $25K or $250K
Some require a 90-day intro period
Most reset to 0.5% after that
Almost none scale to multi-entity practice balances
For a practice with $1M+, the promotional rate is usually a marketing tool, not a real plan.
2026 is a year when the gap between what banks should pay and what they do pay is unusually wide. Run the math, get the quote, switch if it makes sense. The yield is sitting on the table either way.
FAQ
Common questions