Money Matters

Costly Money-Misconceptions Among Consumers

How are you coping with the low-rate market?

New research from WalletHub, a consumer finance company offering data and information on credit, banking & money trends. Reprinte with permission. Visit wallethub.com

The cost of borrowing is rising in lockstep with Federal Reserve rate hikes, but incentives to save seem few and far between. To get a sense of how consumers are coping with this low-rate environment, where people are stashing their cash these days, and what they expect from banking institutions, the personal-finance website WalletHub conducted a nationally representative online survey.

You can find the complete results in the following infographic.

WalletHub today released the results of its nationally representative 2018 Banking Survey, along with the latest market averages in its Banking Landscape Report and editors’ picks for the Best Online Checking Accounts. Here are some highlights:

  • 94% of people could earn an average of 5.6 times higher rates on deposits by switching to an online-only bank account
  • 85% of people think savings accounts offer higher rates than checking accounts, despite the latter yielding more than twice as much on average (0.16% vs. 0.34%)
  • More than two-thirds of people think bank accounts yield over twice as much as they actually do
  • 5 in 10 people have $1,000 or less in the bank, but 76% of people expect to have more money in the bank at the end of 2018
  • As many people want $1K in Bitcoin (9%) as in a CD (9%). Cash (30%) and a bank account (30%) were the top choices
  • Despite 84% of people saying small businesses should receive rates that are at least as high as those consumers get, consumers enjoy interest rates that are more than three times higher on average (0.34% APY for consumers vs. 0.10% for businesses)
  • 28% of people trust Uber drivers more than bankers, and 16% of people would rob a bank if they knew they wouldn’t get caught

For the complete survey, please visit: https://wallethub.com/best-online-checking-account/#survey

Excerpts from 2018 Banking Survey

Market Snapshot: Average Rates, Fees & More

Below, you can find a brief snapshot of the current online checking account market. This includes a comparison of the average online checking account and the average branch-based account as well as key stats about market trends.

Online Checking Accounts vs. Traditional Checking Accounts

Category Online Checking Account Traditional Checking Account
Average APY 0.42% 0.34%
Average Monthly Fee $2.94 $6.73
Average Out-of-Network ATM Fee $0.99 $1.46
Average Minimum-Balance to Avoid Monthly Fee $1,201 $4,320

Key Stats

  • 65% of online-only checking accounts do not charge a monthly fee (up from 60% last year)
  • Banks with a national footprint are more than twice as expensive as banks in general, charging an average monthly fee of $14.96
  • Almost 40% of online checking accounts are interest-bearing, compared to just 26% of traditional checking accounts

For additional information, including historical market data, please see our quarterly Banking Landscape Report.

How to Get the Best Online Checking Account – 4 Tips

  • Know Yourself: Understanding your own banking habits can help you choose the account that best fits your individual needs. There’s a variety of offers out there, each with its own special feature (low fees, high APY, etc.). Pay attention to your own banking habits and shop accordingly.
  • Consider All Options: Don’t limit your search to online-only banks. Even traditional banks with online accounts can be competitive. And they may offer a wider array of services for those interested in more of a “hybrid” banking experience.
  • Create A Central Fund: You don’t need both a checking account and a savings account, unless having both helps you manage your money better. When one type of deposit account offers the best rates by far, as is the case with online checking accounts, you can get away with just that. Creating a one-stop shop for your banking needs could make life easier, after all.
  • Be careful, though. While it’s common for the APY on a savings account to rise along you’re your balance, checking account rates sometimes drop if your balance goes too high. Thankfully, most accounts won’t drop the rate until your balance exceeds $25,000 or so, depending on the institution.
  • Understand The Terms: Most online checking accounts don’t charge many fees for online services. But things like face-to-face teller assistance and paper checks may cost you, if available. So try to review an account’s terms – focus on every place a dollar sign is listed – in order to avoid costly surprises.