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96 Million Americans Have Never Switched Banks — And It’s Costing Them Billions

Written by James Ellis | Published on 8/5/2019

Millions of Americans have never switched banks, a recent survey commissioned by DepositAccounts found. Even more profess loyalty to their current financial institution.

This reluctance to switch banks — especially to an online-only bank — could collectively cost the country billions of dollars.

Key findings

  • An estimated 96 million Americans have never switched banks, collectively leaving up to $42 billion in interest income on the table each year.
  • Of the millions of Americans who have never switched banks, almost 75% say the reason is because they're satisfied with their current account.
  • Almost half (47%) of those surveyed don’t know how much interest they’re earning on their savings account.
  • Most Americans (42%) incorrectly think traditional banks such as Wells Fargo and Bank of America offer the best rates for saving accounts.
  • Nearly 33% of Americans won't consider opening an online savings account. Of this group, 38% say it's because they're satisfied with their current account, 24% prefer to bank in person and 22% don't see the benefit of an online savings account. Also, 18% don't feel online savings accounts are trustworthy. (Note that respondents could select all that apply.)

Loyal to a fault: Those who have never switched banks

Banks appear to be a sticky product for Americans — 75% of the country says they "feel loyal" to their current bank, while nearly 85% of Americans responded "no" when asked if they wanted to change banks.

That's great news for traditional banks like Wells Fargo or Bank of America because almost 70% of account-holding Americans bank primarily with one of these legacy institutions. A much smaller share (20%) bank primarily with a credit union, while an even smaller percentage (6%) primarily bank with an online-only institution.

When the survey respondents who have never switched banks were asked why, the most common reason cited was satisfaction with their current bank (almost 75% of respondents). Trailing far behind in second place was "too much of a hassle" (13%), followed by "not sure which bank to switch to" (6%).

Switching primary banks requires a lot of legwork. It can include remembering every automatic recurring bill payment associated with the bank (and switching these over to your new bank), going to your work's human resources department and telling them to send direct deposits to a new account and more. But the main hurdle preventing millions of people from switching banks seems to be that they don't see the need. To paraphrase an old saying, “If it's not broke, why fix it?”

Making the switch — the young and the restless

It's important to remember that while nearly 40% of those with bank accounts have never switched accounts, the majority of Americans have done so at least once in their banking lives. In general, the older one is, the more likely they are to have switched banks. For example, 35% of those ages 18 to 21 (considered part of Generation Z) have done so, compared with 66% of baby boomers (ages 54 to 72).

However, younger generations are far more likely to express interest in switching banks than older Americans. Of those Gen Zers, 25% said they want to switch banks, as do 21% of millennials (ages 22 to 37). Compared with the 14% of Gen Xers (ages 38 to 53) and 8% of baby boomers, a greater portion of the younger generations are more willing to go with a new bank.

Are bank loyalists informed or ignorant?

Is the loyalty that the majority of Americans feel toward their current bank borne out of the fantastic level of service and products offered by these financial institutions? Maybe, but we also found huge swaths of the country don't pay attention to rates or use them as a metric when choosing a new bank.

For example, roughly 41% of Americans feel traditional banks offer the best interest rates on savings accounts, while only 25% believe online-only banks have the best rate. Surprisingly, 63% of Gen Z and 55% of millennial respondents think traditional banks offer the best rates. Those are two age cohorts you might not associate with trusting large financial institutions to provide the best deal.

In reality, the average APY earned by a savings account at an online-only bank far outpaces the average of a traditional bank or credit union. Analysis from DepositAccounts shows the average rate for online-only banks sits at 1.52% APY, while the average at traditional banks is 0.26% and 0.23% at credit unions.

Besides misidentifying where the best rates are, many Americans don't keep track of how much interest their current savings account earns for them. Nearly 47% of those surveyed admitted to not knowing this number. While a greater proportion of those who obtained at least a bachelor's degree knew that online banks offered a higher rate (and what the rate of their current savings account earned), a college education shouldn't be a requirement to get the most from your deposit account.

If more Americans knew how much interest they could earn with an online-only bank savings account, they might feel less reticent to switch to an internet bank than they do now. According to the survey, nearly one third of the country refuses to open a savings account with an online-only bank. As you can see below, the reasons resemble those given by the group of Americans who have never switched a bank account.

Would 38% of the country still feel satisfied with their current account if more Americans knew about the interest rates available at online-only banks, or were more aware of interest rates in general?


DepositAccounts by LendingTree commissioned Qualtrics to survey 1,005 Americans who have a bank account. The survey was fielded May 21-22, 2019, and the overall margin of error for all respondents is +/-3%.

Related Pages: nationwide deals, Internet banks, banking tools and data
Previous Comments

  |     |   Comment #3
Lets suppose the 96 millions depositors it is a correct number, then again, it means nothing because most of those 96 millions accounts could be dormant accounts, accounts opened when there were no monthly fees ( grand fathered free accounts) and or used occasionally just to keep them alive. Reason being that those account are still opened are because it is convenient place to deposit cash, checks and other instruments or withdraw cash and then the money are being transferred to the primary accounts on the online only accounts.
I know because I have kept all of the local bank accounts opened for long long time, but are not my primary checking accounts.
It is much faster to deposit a check in a local bank and then ACH to other online banks only than to mail and wait for the deposit to clear. Some online banks do not allow paper checks at all, what do yo you do then?
I thing this article is misleading the readers by not providing the actual data and the real reason for those accounts that are still opened at the local banks, but they gave us some snippets from previous similar articles.

I do not believe that $42 billions in interest income are left on the table each year. I also do not believe that almost 75% say the reason is because they're satisfied with their current account. I know quite few people because I used to be in the banking industry and they all complained about fees of any kind and to be satisfied, it is not a correct statement.
  |     |   Comment #4
Ally dropping its savings account rate from 2.10 to 1.90. Is this the end for Ally as a competitor? Or is everyone else going to do that now too? We shall see.
  |     |   Comment #5
Apologies to Barney. Meant to post that as a separate comment not as a reply to your comment.
  |     |   Comment #6
Well, the Federal Government has not been balancing the books and it is costing them trillions. Way more than lost interest from "lazy" accounts.
  |     |   Comment #7
Please do not delete this post.
I believe this type of poorly researched, "feel good", user survey based articles do more harm than good. There is simply no way of calculating 42 billion dollars of lost interest so it's just plain silly to write it down and publish it on this website. By doing so, you are simply adding to the collective ignorance by making up facts no one can support. It becomes nothing more than the dead leading the almost dead. Please refrain from looking foolish.
  |     |   Comment #8
My take...

"An estimated 96 million Americans have never switched banks, collectively leaving up to $42 billion in interest income on the table each year."

If 96 million Americans missed an opportunity to earn 42 billion dollars in interest per year, that means the average person in that group missed out on less than $450 a year in interest.

I don't think that's an important enough amount to most people in the context of the average household income to spend much time thinking about what bothering with switching bank accounts even if they are aware of the opportunity cost of not switching.

Remember that the people that hang around this site have experience moving from account to account and some have become quite efficient at it lowering it perceived cost. I think that the reward doesn't seem worth the effort to most people especially if they're not familiar with the process. The numbers just aren't big enough for the average person's account.
  |     |   Comment #9
My parents fell victim to this, they opened an interest bearing account at a 'large bank' about 20 years ago when rates were decent. As they are now retired and getting older they asked me to help them review their financial info - I practically lost it when I saw they had been earning a whole 0.03% interest for who knows how many years now - they never bothered to see if the bank was still giving them a good deal. They didn't want to close the account because they liked that the branch was convenient to their house - even though they haven't really gone there in person in years - plus they didn't like the idea of moving money to another bank they "couldn't walk into a branch of if they needed to". I couldn't even get them to put some in a CD at their bank for a higher (but not great) rate, because they were fretting about 'what if we need it' despite the fact all they would lose was a few months interest in the unlikely scenario that they needed it soon. They were getting agitated as if I was trying to feed them arsenic or something, so they are still earning 0.03%...
  |     |   Comment #11
The older people get the harder it is for them to make changes like that. The money becomes less important than the familiarity in the convenience. Especially if everything seems to be working okay, it's unsettling for them to think about making that kind of change.
  |     |   Comment #15
I have a checking account with Chase. They have a branch right down the block from me as well as several others nearby. I also go into Manhattan often and sometimes need access ATMs and Chase has convenient ATMs. We have our salaries and use the account for some small bill paying. I keep the balance low and have a grandfathered free checking account when my wife worked for a company that sold their retail banking to Bank of New York which Chase later purchased.
  |     |   Comment #16
Hmmmmm... I also have a Chase account, two to be exact a checking account and a savings account. But it wasn't opened by me. It's a trust account for which I am a trustee. And I also live in the New York City area with many branches close by. For the life of me I can't see any reason to use Chase Bank as a retail banking customer. The only use for Chase Bank that I can see is as the comparison bank on the websites of other FIs when they are demonstrating that they pay X more times interest than other banks. Chase makes the perfect practically zero interest foil for them comparison.

Sometimes I think that Chase Bank is really owned by the other at FIs and only exists for the purpose of having a no-interest bank to compare their rates to.
  |     |   Comment #17
#16 I only use Chase for checking and see no reason to use any of the major banks for savings or CDs as they are not competitive with credit unions and other banks mentioned here. In your case guess you are stuck.

I do use Chase for signature guarantees but it takes time as all of these requests have to be reviewed by their legal departments. The customer service people have to scan the documents for legal review.

I did have a CD with Chase years ago. It was a CD that went to Chase when Washington Mutual went belly up. Chase did honor the 5% and change rate until maturity at which point I moved the funds to another institution.
  |     |   Comment #18
I have nothing against Chase really. I used their commercial services when I was in business and they're excellent for that. I think they're entire retail banking operation is just an afterthought. They are really designed to be a commercial bank to serve the business community. But there are enough people who don't pay any attention to how much interest they're earning for them to make a very handsome profit in retail banking too, so why not?
  |     |   Comment #19
#18 I wouldn't say their retail bank is an afterthought. They have the most bank branches in my area after taking over the Bank of New Yorks and Barclays retail operations. They have also opened new branches in my area.

The new branches have no tellers. You do deposits and withdrawals at an ATM inside the bank. They have customer service reps to assist and take care of other bank chores.
  |     |   Comment #20
No I agree the Chase retail banking operation is gigantic. But I think it's an afterthought in the sense that they realized a long time ago that they don't have to be competitive to attract depositors in their retail banking division. So their attitude is what the heck we might as well do it.
deplorable 1
  |     |   Comment #21
I know many people who fall into the category of never changing banks and/or are fearful and don't trust online only banks. I used to try and convince friends and relatives to move banks for a much higher rate but I don't even bother anymore. I came to the conclusion years ago that when it comes to all things financial most people don't use logic and reason. They seem to be guided with instinct and emotion rather than facts. I'm loyal to whichever bank or credit union is paying the highest rate for the longest period of time and offers the most flexibility when moving funds/.paying bills.
  |     |   Comment #22
There are many people who stay loyal to a bank even if the "grass is greener" somewhere else. They do not play the game like a rate chasing (insert term for a lady of the night at the street corner). Moving money across the country is like moving it to another country. Your money can disappear without you knowing it. FDIC or no FDIC.
  |     |   Comment #23
Before rates were reduced to practically nothing after 2008 I used to be a rate player for many years albeit not to the extent I have been recently. But I didn't do much of it for the next 8 years since the difference between 0.9% and 1.0% just wasn't enough to get excited about even with a large portfolio.

I started to get back in the game a year or so ago when rates started going up. And I'm earning a very significant bonus for having done this. But when things mature I won't be able to repeat it because rates are clearly going down. Still I'll be rewarded handsomely for the effort that I put in over the last year or so. And depositaccounts.com has been a terrific resource.

I do have to admit that it can be nerve-wracking sending seven-figure sums to FIs in some other state that you've never even heard of, especially if there were unknowns that just don't seem to be clear even after performing your due diligence... It seems there almost always are. But that's all part of the game if you want to play it. And I think you build confidence as you get more experience (misplaced or not).

Nonetheless you do have to put that stress factor in the cost column as an additional cost of playing this game. I can understand how for some people that cost alone would be enough to prevent them from playing.

In all the years I've had bank accounts I've only experienced one bank failure. It was a local bank I'd say in the mid-80s, and I remember standing on line for hours to go in and complete the paperwork. FDIC did cover the full principal, I don't remember what happened with interest but I'm pretty sure a significant amount was lost.

Yes even if you have FDIC or NCUA coverage I expect that it would not be fun to go through a bank failure where you have an account. And the lost interest cost may be substantial particularly if the you had a large balance. It's a real risk that is mostly impossible to assess since no warnings are issued before a bank fails.
  |     |   Comment #24
As I live on interest now - I do move money regularly and until now have always been able to increase my annual income. In most cases all online banks are great and I have not had any issues. Some are quicker than others to release your funds however.
Credit unions if you are military or have some in your family that has been in the military or currently is you can still get super deals. Just avoid Andrew Federal Credit Union - they have to be the worst anywhere with bad customer service and they create fines out of thin air.
  |     |   Comment #25
I have never had a problem with Andrew Federal CU. Of course, I have never closed out a CD before it's maturity date either. Always read the "Disclosure Agreement" carefully before opening an account with an financial institution. It avoids surprise fees or penalties.
deplorable 1
  |     |   Comment #26
I'm on my second CD with Andrews and no problems at all. I set the CD to automatically be transferred into the savings account at maturity. I did have to use Discover to pull the funds out though since their ACH limits are low.

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