The Fed has raised the amount it pays on excess reserves by 100 basis points since December 2015. Meanwhile credit unions and most other financial institutions have barely nudged rates higher.

After years of near-zero rates on shorter-term deposits, consumers simply lost interest figuratively and literally in what financial institutions were offering in the way of short-term deposits. But maybe they are waking up.

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Most money funds now pay roughly 1%. If you are not getting close to that, you’re in the wrong fund. You can even buy three-month or longer T-bills and earn well over 1%. Perhaps inflows into bond and money market funds are simply bank and credit union customers moving out.

This is probably not a problem for you or you would be raising rates. You either have more deposits than you want or you haven’t seen any outflows. But the more rates rise, if they do, the more consumers will wise up to alternatives.ContentMiddleAd

If, and this is a big if, the Fed raises rates another 100 basis points over the next year, how long will members be happy with ultra-low rates?

I am not suggesting you suddenly boost rates, but I am suggesting two things. First, know where funds are going when they flow out of your credit union. Second, you don’t have to be the first but don’t be the last one on your block to raise rates.

Dwight Johnston is the chief economist of the California and Nevada Credit Union Leagues and president of Dwight Johnston Economics. He is the author of a popular commentary site and is a frequent speaker at credit union board planning sessions and industry conferences.