Banks Borrow Unsecured Cash at Record Clip While Deposits Flee

Deposits at U.S. lenders fell in two consecutive quarters last year for the first time in over a decade

Americans have missed out on $603 billion of free money over the last eight years by sticking with big banks like Wells Fargo and Bank of America. WSJ’s Dion Rabouin explains why people aren’t moving their money in smarter ways and why they should be. Photo: Brian Snyder/Reuters

Banks were chasing away deposits during the depths of the pandemic. Now, some are paying higher rates to shore up cash.

Borrowing in the federal-funds market hit $120 billion on Jan. 27, the highest one-day total in Federal Reserve data going back to 2016. Activity in fed funds—used by banks and government-backed lenders to exchange cash reserves parked at the Fed—surged throughout the past year when the central bank raised interest rates at the fastest pace in decades.

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