Banking Landscape Report – January 2014

by Sonia Garrison

2014 Banking Landscape

It’s no secret the nature of personal finance has shifted considerably in recent years. Technology has closed the door on the era of neighborhood banking, bringing consumers simultaneously closer to and farther away from their financial institutions of choice. Widespread economic woes have unearthed a number of unsavory practices and institutional failures, while also saddling us with an uphill financial battle. Even the new regulations designed to cure the ills of years past have taken some getting used to.

The result is an environment in which long-held assumptions regarding which type of financial product to use may no longer hold true. In order to help consumers navigate this often unrecognizable, yet critically important segment of everyday life, WalletHub analyzed the fees, features, and rates associated with nearly 1,700 checking accounts, savings accounts, money market accounts, and CDs from financial institutions both big and small, both online and brick-and-mortar, and both shareholder- and member-owned.

Ultimately, the findings should serve as a roadmap of sorts for consumers seeking to make the most of their money with the aid of efficient everyday banking habits.

 
 

Main Findings

  • Online-only checking accounts are significantly cheaper than full-service (branch) checking accounts.
    • Standard fees on the average online-only checking account are 16-26% lower than those charged by full-service accounts.
    • The minimum required balance to avoid the monthly fee on the average online checking account is 26% lower than that that of the average full-service account.
    • Online-only checking accounts pay 110% -265% higher interest rates on balances up to $50,000 than full-service checking accounts.
    • It is interesting to note, however, that the checking account with the highest interest rate is branch-based. Lake Michigan Credit Union Max Checking offers a 3.0% APY on balances up to $15,000.
  • Interest-bearing personal checking accounts pay as much as 106% - 504% higher rates on balances up to $50,000 than savings and money market accounts. This is surprising since most people are trained not to even consider using a checking account as a savings vehicle.
  • Money market accounts charge 122% higher monthly fees than online-only checking accounts, and require a 44% higher minimum balance to avoid such fees.
  • One-to-five-year CDs pay 229% - 965% more interest, on average, than savings and money market accounts.
  • On average, there is a 5X interest rate difference between the best deposit accounts and the average account. That holds true for savings accounts, money market accounts, and CDs, making comparison shopping extremely important.
  • The monthly fee charged by the average full-service student checking account is 71% lower than that charged by the average general-consumer online checking account. Full-service student checking accounts also have a 86% lower minimum balance requirement to avoid monthly fees.
    • However, other standard fees such as non-bank ATM and overdraft fees are 20% - 62% more expensive on student checking accounts.
    • As a result, online accounts may be more affordable in the long run for even this unique segment of the population, to which banks typically cater better-than-expected offers due to their above-average earning potential and years of financial maturity that await.
  • Business checking accounts are more expensive than general-consumer checking accounts (both online and full-service) in nearly every major category, from monthly fee to minimum balance requirement to ATM fee. This is most likely due to the fact that business accounts tend to offer the most features.
    • The interest rate that you get on the average online personal checking account is 339% to 823% higher, depending on the balance, than the rate offered by the average business checking account. Small business owners may therefore be better off depositing company savings into a personal account.

 
 

Checking Account Fees

Average Fees on Personal Checking Accounts

Branch - Jan 2014 Online - Jan 2014
Monthly Fee $5.55 $4.09
Monthly Fee w/ Min Requirements to Waive Met $0.39 $0.36
Min Balance to Avoid Monthly Fee $3,169.73 $2,341.67
Non-Bank ATM Fees $1.59 $1.11
Paper Statement Fee $1.20 $2.68
Online Bill Pay $0.38 $0.11
Minimum to Open $124.32 $129.80
Overdraft Fee $32.21 $26.83
Insufficient Funds Fee $32.29 $27.25

Average Fees on Business and Student Checking Accounts

Business
- Jan 2014 -
Student
- Jan 2014 -
Monthly Fee $7.42 $1.21
Monthly Fee w/ Min Requirements to Waive Met $1.11 $0.03
Min Balance to Avoid Monthly Fee $4,769.48 $321.43
Non-Bank ATM Fees $1.78 $1.79
Paper Statement Fee $1.36 $1.82
Online Bill Pay $1.11 $0.28
Minimum to Open $108.66 $39.44
Overdraft Fee $32.90 $32.67
Insufficient Funds Fee $32.90 $32.69

 
 

Checking Account Features

Key Features on Personal Checking Accounts

Branch
- Jan 2014 -
Online
- Jan 2014 -
% $0 Monthly Fee w/ No Min Requirements 43.65% 54.00%
% $0 Non-Bank ATM Fee 15.70% 47.50%
% $0 Paper Statement Fee 52.83% 36.67%
% $0 Overdraft/ NSF Fees 0.00% 12.50%
% $0 Minimum to Open 24.62% 8.00%
% $0 Online Bill Pay 92.05% 97.78%
% Interest Bearing* 23.54% 54.00%
*$1,000 balance

Key Features of Business and Student Checking Accounts

Business
- Jan 2014 -
Student
- Jan 2014 -
% $0 Monthly Fee w/ No Min Requirements 43.45% 77.94%
% $0 Non-Bank ATM Fee 11.43% 15.56%
% $0 Paper Statement Fee 54.41% 39.39%
% $0 Overdraft/ NSF Fees 0.00% 0.00%
% $0 Minimum to Open 29.65% 23.53%
% $0 Online Bill Pay 83.05% 95.00%
% Interest Bearing* 8.14% 1.47%
*$1,000 balance

 
 

Checking Account Interest Rates

Average Interest Rate for Interest Bearing Personal Checking Accounts

Branch
- Jan 2014 -
Online
- Jan 2014 -
$1,000 balance 0.25% 0.54%
$3,000 balance 0.23% 0.49%
$10,000 balance 0.20% 0.53%
$25,000 balance 0.12% 0.37%
$50,000 balance 0.11% 0.41%
  • The highest interest rate paid for a branch checking account was 3.0% (on balances up to $25,000) and the highest for an online account was 2.01% (on balances up to $15,000).

Average Interest Rate for Interest Bearing Business and Student Checking Accounts

Business
- Jan 2014 -
Student
- Jan 2014 -
$1,000 balance 0.06% 0.05%
$3,000 balance 0.08% 0.05%
$10,000 balance 0.08% 0.05%
$25,000 balance 0.08% 0.05%
$50,000 balance 0.08% 0.05%
  • The highest interest rate paid for a business checking account was .25% and the highest for a student checking account was .05%.

 
 

CD / Savings Account Interest Rates

Average Interest Rate for Savings, Money Market Accounts (MMA) and CDs

Average
- Jan 2014 -
Highest
- Jan 2014 -
Savings $1,000 balance 0.13% 0.85%
Savings $3,000 balance 0.13% 1.00%
Savings $10,000 balance 0.14% 1.00%
Savings $25,000 balance 0.15% 1.00%
Savings $50,000 balance 0.15% 1.00%
MMA $1,000 balance 0.09% 1.01%
MMA $3,000 balance 0.11% 1.01%
MMA $10,000 balance 0.15% 1.01%
MMA $25,000 balance 0.18% 1.01%
MMA $50,000 balance 0.20% 1.01%
3-Mo CD 0.19% 1.50%
6-Mo CD 0.24% 0.99%
1-Yr CD 0.30% 1.25%
2-Yr CD 0.44% 1.35%
3-Yr CD 0.61% 1.30%
5-Yr CD 0.96% 2.15%


 
 

CD / Savings Account Fees & Features

Interest Rate for Savings, Money Market Accounts and CDs
- $10,000 balance -

 
 
Minimum to Open Requirements Savings and Money Market Accounts and CDs

Jan 2014
Average Minimum to Open Savings $112.11
% $0 Min to Open Savings 13.23%
Average Minimum to Open MMA $2,466.09
% $0 Min to Open MMA 12.84%
Average Minimum to Open CD $1,047.40
% $0 Min to Open CD 3.97%

Monthly Fees on Savings and Money Market Accounts

Jan 2014
Average Monthly Fee Savings $2.73
Average Minimum Balance to Avoid Monthly Fee Savings $332.69
% $0 Monthly Fee Savings 30.06%
Monthly Fee with Minimum Requirements to Waive Met Savings $0.00
Average Monthly Fee MMA $9.09
Average Minimum Balance to Avoid Monthly Fee MMA $3,367.24
% $0 Monthly Fee MMA 17.52%
Monthly Fee with Minimum Requirements to Waive Met MMA $0.00

Access to Funds Savings and Money Market Account Features

Jan 2014
% $0 Withdrawals - Savings 5.42%
Ability to Write Checks - Savings 34.07%
Offer ATM Card - Savings 77.17%
% $0 Withdrawals - MMA 3.01%
Ability to Write Checks - MMA 65.97%
Offer ATM Card - MMA 79.58%

 
 
 

Author
User
Sonia Garrison is Research Manager at Evolution Finance. Previously she worked as a Senior Researcher at the Center for Responsible Lending. Sonia has more than 20 years experience…
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