Money Matters - WalletHub Banking Survey and Banking Landscape Report

 The personal-finance website WalletHub today released the results of its nationally representative 2023 Banking Survey and its Q3 Banking Landscape Report, which showcase consumer sentiment and detail the average fees, features, and rates associated with more than 2,200 checking accounts and savings accounts. You can find highlights below, followed by expert commentary and tips.

Banking Survey:

• Interest Rates Impact Spending: More than 3 in 5 Americans say high interest rates are making them want to spend less money.
   
• Squirreling Away Savings: 56% of people say they are keeping more money in their bank accounts right now versus last year due to higher interest rates.
   
• Concerns About Small Banks: 46% of people say they’re hesitant to put their money in a small bank or credit union.
   
• Interest Rate Preferences: 56% of Americans say they care more about interest rates on bank accounts than on credit cards.
   
• Upcoming Account Openings: Almost 1 in 3 people plan to open a new bank account in the next 12 months.
   
• Positive Rate Sentiment: 41% of people are happy or excited about high interest rates on bank accounts.
   
• Account Selection Factors: 41% of people say fees matter the most when choosing a bank account, while 22% prioritize interest rates and 14% focus on reviews.

Learn more: 2023 Banking Survey

Banking Landscape:

• Surging Interest Rates: Savings account rates increased by 270% compared to last year, while checking account rates increased by 191%. CD rates have increased by 151%.
   
• Credit Unions Charge Less: People looking to save on checking account fees should focus on offers from credit unions, which are an average of 62% cheaper than the next-best option, checking accounts from small banks.
   
• Savings Out-Yield CDs: Your run-of-the-mill online savings account (3.79% APY) yields almost 35% more than the average 1-year CD (2.80%).
   
• Best Checking Account: Primis Premium Checking (5.07% APY)
   
• Best Saving Account: UFB High Yield Savings (5.25% APY)
   
• Best 1-year CD: CFG Bank CD (5.67% APY)

Learn more: Q3 Banking Landscape Report, Best Savings Accounts, Best Checking Accounts, Best CD Rates
 


Where should people look for the best deposit account rates?
 
“Online savings accounts offer the best rates right now, yielding an average of 3.79%, which is nearly three times as much as online checking accounts – the next best option,” said Jill Gonzalez, WalletHub analyst. “In particular, UFB High Yield Savings is our pick for the best savings account of 2023 because it offers an APY of up to 5.25% and does not charge a monthly fee.”
 
Do people really care about checking and savings account rates?
 
“People care about banking yields a lot more than you might think. According to a new WalletHub survey, 56% of people care more about the interest rates on bank accounts than credit card interest rates, despite credit card debt surpassing $1 trillion and credit card rates rising to record highs,” said Jill Gonzalez, WalletHub analyst. “High rates are even putting smiles on consumers’ faces and influencing their behaviors, as 41% of people surveyed said they are happy or excited about high interest rates on bank accounts and 56% said they’re keeping more money in their bank accounts now.”
 
Can we expect a lot of people to get new bank accounts in the near future?
 
“A new WalletHub survey found that 1 in 3 people plan to open a new bank account in the next 12 months, and while many people are inspired by high interest rates, the yield won’t necessarily dictate which accounts consumers choose. Forty-one percent of people say that fees are the most important consideration, compared to just 22% who focus on interest rates. Only 14% of people put reviews at the top of their list of important factors to consider when choosing a bank account,” said Jill Gonzalez, WalletHub analyst.
 
How has the banking landscape changed in the past year?
 
“Deposit accounts have become much more competitive in the past year, as Fed rate hikes have continued to push interest rates away from historical lows. Savings account rates increased by 270%, while checking account rates rose 191% and CD rates are up 151%,” said Jill Gonzalez, WalletHub analyst. “The average savings account currently has a 3.79% APY, which is almost 35% more than the average 1-year CD yield of 2.80%. Still, a high-yielding CD could be a good call, as it will enable you to lock in a good APY before the rate cuts expected next year.”
 
 

4 Tips for Success in the Current Banking Landscape

1. Don’t worry about bank failure if you’re saving less than $250,000. According to a new WalletHub survey, 46% of people are concerned about putting their money in a small bank or credit union following high-profile bank failures earlier this year, but it’s important to remember that nearly all banks and credit unions insure deposits up to $250,000 per person, per institution. The Federal Deposit Insurance Corporation provides this coverage for banks, while the National Credit Union Administration covers credit unions. So your money is protected against the risk of bank failure if your deposits are below the limit. If you have more to save, you can spread it across financial institutions to ensure it’s all insured. What you should not do is assume you have to choose between deposit insurance and a high interest rate. You can have your cake and eat it too.
    
2. See what else is out there if you haven’t switched accounts lately. The banking landscape has changed a lot in recent months, and if you haven’t shopped around for a new savings account, checking account or CD lately, you might not even realize how much money you’re leaving on the table. For example, you can earn a 5% yield with no risk from a variety of deposit accounts these days. That’s a huge difference from the paltry rates common a few years ago.
    
3. Consider getting a CD before next year’s rate cuts. The Federal Reserve is expected to cut its target rate next year, which should lead to a decline in deposit accounts with variable rates. Before that happens, you can lock in a higher rate with a certificate of deposit. Just make sure you won’t need the money for the duration of the CD term, as there will likely be a penalty for early withdrawals.
    
4. Don’t let credit card rates swallow your banking yield. Even though bank account rates are very high right now, credit card interest rates are still way higher. As a result, earning 5% from your bank account won’t help you too much if you’re paying credit card interest at a 20% - 36% annual rate. So, take advantage of credit card offers with 0% introductory APRs for purchases or balance transfers if you have the good or excellent credit needed to qualify and work on creating a sustainable budget. That way, the interest you earn on your deposits can be pure savings.