Consumers Have More Trust in Banks Than the Government

Public trust in the federal government is near historic lows. According to Pew Research Center, just 22% of Americans trust the federal government most or about all the time.

According to the latest DepositAccounts survey of about 1,700 U.S. consumers, just 53% trust the federal government to keep consumers’ best interests in mind with banking and personal finances. However, 70% trust financial institutions in this manner.

Here’s what else we found.

Key findings

• Consumers have more trust in banks than the federal government. While 70% of consumers trust financial institutions to keep their best interests in mind, only 53% say the same about the federal government for their personal finances. By political party, Democrats (67%) have far more trust in the government than Republicans (49%).
• Most Americans favor more financial regulations for banks. 2 in 3 consumers (67%) think banks should face additional regulations, with Democrats more in favor than Republicans (72% versus 61%). However, 72% of consumers trust financial institutions to protect their assets and data, and 68% believe banks offer enough identity and fraud protection.
• Many are loyal to their financial institution. Just 1 in 5 consumers (20%) have switched primary institutions in the past year, with many lured by better treatment or higher incentives. High APYs are also important for many consumers, with 45% trusting a financial institution less when their APY is lowered.
• Unsurprisingly, consumers dislike bank fees. Over half (55%) of consumers think their bank charges too many fees. When asked which of these charges they dislike the most, 29% said monthly maintenance fees, 21% said out-of-network ATM fees and 21% said overdraft fees.

Consumers don’t trust the government

Personal finances are delicate, but most consumers trust banks over the government. Overall, 70% of consumers trust financial institutions to keep their best interests in mind, with Democrats (75%) and six-figure earners (75%) the most likely to say this.

Meanwhile, just a little over half (53%) trust the federal government with their banking and personal finances. Democrats are again more trusting, with 67% having faith in the government. That compares with 49% of Republicans and 43% of independents.

Older consumers have less faith in the government than younger consumers, with just 46% of Gen Xers ages 44 to 59 trusting it with their money. That’s followed by:

• 50% of baby boomers ages 60 to 78
• 58% of millennials ages 28 to 43
• 64% of Gen Zers ages 18 to 27

Meanwhile, 51% of those earning less than $30,000 in household income share this trust — the lowest by income group. Comparatively, 61% of six-figure earners say similarly.

According to Matt Schulz, LendingTree chief credit analyst and author of "Ask Questions, Save Money, Make More: How to Take Control of Your Financial Life,” people understandably don’t trust anyone with their money.

“The scars of what people have seen and been through from the Great Recession through the pandemic to today’s inflationary struggles are deep and have left a lot of people jaded,” he says. “We’ve also seen headlines and streamed documentaries about Ponzi schemes, multilevel marketing scams and so many other grifts going on that people don’t know who to trust.”

However, Schulz believes this lack of trust really impacts people’s money. “If you don’t trust your money is safe with a bank, you’re not going to put any in one,” he says. “Those fears and often unfounded concerns mean a lot of people may have a lot of money that isn’t working for them when it could have earned substantial returns for the last couple of years.”

2 in 3 consumers call for more financial regulations

Despite having more trust in banks than the government, the majority of Americans support more financial regulations for banks. Across all consumers, 67% think banks should face additional regulations. Democrats (72%) are more likely to support this than independents (64%) and Republicans (61%).

Younger consumers are also more likely to support more regulations, at 75% among Gen Zers and 72% among millennials, versus 68% among Gen Xers and 55% among baby boomers.

That being said, Schulz says financial regulations have increased significantly under the Biden administration. One of the most significant banking proposals involves capping overdraft fees at $14, and possibly as low as $3. “This is a big deal and has the potential to save consumers real money, especially because those who pay these fees tend to pay them repeatedly,” Schulz says.

Although consumers want more regulations, 72% still trust their financial institutions to protect their assets and data. Separately, 68% believe banks offer enough identity and fraud protection.

Despite new account bonuses, consumers are loyal to their banks

Not only do consumers trust banks, but they’re also loyal to their current institution. Only 20% of consumers have switched primary institutions in the past year, with Gen Zers (33%), those with children younger than 18 (31%) and millennials (29%) leading the way. Of those who have, unfair treatment (32%), better APYs (31%) and higher incentives (29%) are the top motivating factors.

Schulz believes more Americans should take advantage of what can be earned by switching banks, or at least by shopping around. “That’s especially true with savings because high-yield accounts offer returns that would’ve been unheard of a few years ago,” he says. “To be blunt, if you haven’t at least looked around for a new savings account in the past year or so, you’ve likely left money on the table, and that’s the last thing anyone needs to do.”

High APYs aren’t only important for those switching — how a bank handles APYs impacts consumers’ trust. Across all consumers, 45% trust a financial institution less when their APY is lowered.

Regardless of whether they’ve switched primary accounts recently, 39% have opened a new account because of an incentive like a sign-up bonus. When asked how they feel about financial institutions offering incentives, many consumers expressed positive feelings, with 40% happy to have the option to switch banks for better rewards and 39% appreciating the competitive offerings banks have to offer to gain business.

However, 23% are concerned about banks neglecting current customers to attract new ones, and 23% are skeptical about strings attached to new sign-up incentives.

More than half believe banks charge too many fees

Fees are a common pain point for consumers, with 55% believing their bank charges too many fees. Of the common charges received, 29% dislike monthly maintenance fees the most. Meanwhile, 21% dislike ATM fees and 21% dislike overdraft fees over all other fees.

Schulz says you don’t have to settle for paying all the fees your financial institution charges.

For one, you can change institutions: There can be a major difference in the fees charged from one bank or credit union to another. While it can be a pain to change institutions, the savings can be significant — so long as you do your homework.

“There’s no guarantee it’ll work, but it’s always OK to ask a financial institution to waive a fee,” Schulz says. “Don’t let anyone tell you otherwise. In some cases, you may need to threaten to take your business elsewhere to get your way, but sometimes that’s necessary. It’s something you shouldn’t do lightly, and it’s important to understand the ramifications of changing banks before you take that step, but being willing to walk away can be a powerful tool in negotiations.”

Considering switching institutions? Top expert tips

Consumers should take advantage of current deals when considering switching financial institutions. Particularly, Schulz recommends the following:

• Don’t wait. “The Federal Reserve is increasingly likely to lower interest rates in the next few months, meaning that the days of record-high savings account yields are ending,” he says. “The Fed isn’t likely to slash rates dramatically immediately, so there’s no need to panic by any means, but every decrease means a little less interest in your account, so why wait?”
• Look beyond the yield. “High-yield savings account returns are a little like credit card sign-up bonuses,” he says. “A lucrative one can get you all fired up and keep you from taking the time to dive further into the offer. Don’t let that happen to you. Make sure you look at the minimum required deposit, service charges or other fees and other key details that can affect what you earn. If you don’t, you might be disappointed.”

Methodology

DepositAccounts commissioned QuestionPro to conduct an online survey of 1,706 U.S. consumers with a bank account, ages 18 to 78, from July 15 to 17, 2024. The survey was administered using a nonprobability-based sample, and quotas were used to ensure the sample base represented the overall population. Researchers reviewed all responses for quality control.

We defined generations as the following ages in 2024:

• Generation Z: 18 to 27
• Millennial: 28 to 43
• Generation X: 44 to 59
• Baby boomer: 60 to 78