Deposit Account Holders Netted 5.25 Times More Interest in 2023 Than in 2022

The past couple of years have been good to depositors, with interest rates rising and fees falling. And 2023, in particular, was good to bank account holders. In fact, those with deposit accounts netted 5.25 times more in interest than in 2022.

Here’s what else we found.

Key findings

• Banks paid out $315.4 billion to domestic deposit accounts in 2023, according to our analysis of quarterly Federal Deposit Insurance Corp. (FDIC) filings. This contrasts sharply with the $78.7 billion paid out in 2022. That equates to a year-over-year increase of 301.0%.
• Banks collected $30.3 billion in fees on these same accounts in 2023, down 8.5% from $33.1 billion in 2022. Combined, this represented a net gain of $285.1 billion for depositors in 2023, compared to $45.6 billion in 2022. That’s a 525.7% difference, or 5.25 times more.
• Each deposit account earned an average of $440.54 in 2023, 384.2% more than an average of $90.99 in 2022. These deposit accounts include demand deposit accounts (such as checking accounts), savings deposit accounts, time deposits (such as certificates of deposit) and certain retirement savings accounts.
• Meanwhile, the typical account was charged $42.39 in bank fees in 2023, up 7.7% from $39.35 in 2022. Overall, this left depositors with a surplus of $398.15, compared with a profit of $51.64 a year earlier — a dramatic increase of 671.0%.
• By quarter in 2023, accounts went from earning an average of $84.02 in interest in the first quarter to $132.59 in the fourth quarter. While interest payments rose dramatically throughout 2023, average charges per account stayed in the $10 range each quarter.

Banks paid out 301.0% more in interest in 2023 than in 2022

There’s no denying bank depositors are seeing their savings grow faster. In 2023, banks paid out $315.4 billion to domestic deposit accounts — a massive 301.0% increase from the $78.7 billion paid out in 2022.

That increase is part of a larger trend: In last year’s deposit account interest study, we found that banks paid out 223.1% more in interest in 2022 than in 2021.

According to DepositAccounts founder Ken Tumin, interest rates play the largest role.

“The Fed raised its benchmark interest rate in 2022 by 425 basis points, the largest annual increase since 1980,” he says. “Most of the increases came in the second half of 2022, and banks took some time before they increased deposit rates based on Fed rate increases. Thus, most of the impact of the Fed interest rate increases on deposit rates came in 2023.”

And, like last year, fees are falling. In 2023, banks collected $30.3 billion in fees, down 8.5% from $33.1 billion in 2022. That’s a dramatic difference from the 2.6% decrease in fees between 2021 and 2022. Tumin says this decrease is an attempt to attract and retain customers.

“Overdraft and nonsufficient fund (NSF) fees make up a large portion of fees that depositors pay,” he says. “Due to more consumer-friendly fee policies that many banks have enacted in the last few years, overall fee revenue has been trending down.”

What’s more: In January 2024, the Consumer Financial Protection Bureau (CFPB) proposed a new rule aimed at limiting excessive overdraft fees at banks and credit unions with more than $10 billion in assets — another potential win for depositors.

All in all, depositors walked away with a net gain of $285.1 billion in 2023. That compares to $45.6 billion in 2022 — a difference of 525.7%, or 5.25 times more.

Consumers earned 384.2% more per account in 2023

Breaking that down by deposit account, the average interest earnings per account were $440.54 in 2023. That’s 384.2% more than an average of $90.99 in 2022 and an even further jump from the 179.1% increase between 2021 and 2022.

While that’s good news, Tumin says deposit interest rates likely peaked in late 2023 and early 2024.

“Since December 2023, there have been signs that the Fed will cut its benchmark interest rate in 2024,” he says. “Banks responded to these signs in early 2024 with modest reductions to their deposit rates. That will likely continue until the Fed lowers its benchmark rate, and then more widespread deposit rate reductions should be expected.”

When it comes to bank fees, the average account was charged $42.39 in 2023. While that’s up 7.7% from $39.35 in 2022, that still left depositors with a surplus of $398.15. In comparison, depositors ended 2022 with a $51.64 profit — meaning the surplus increased by 671.0%. Notably, that surplus also increased 521.2% between 2021 and 2022.

Interest payments rose dramatically by quarter in 2023

By quarter, deposit accounts went from earning an average of $84.02 in the first quarter to $132.59 in the fourth quarter in interest — a dramatic rise.

The Fed steadily increased interest rates through the first half of 2023, with four 25-point increases from February to July. That means the federal funds rate went from a target of 4.25%-4.50% to 5.25%-5.50%. The Fed maintained that target through December.

Alongside these interest rate increases, the average charges per account stayed in the $10 range each quarter in 2023 — increasing profits per account. In the first quarter, the average account netted $73.46. That rose to $122.00 in the fourth quarter.

Capitalizing on current interest rates: Expert tips

While depositors are earning significantly more now via interest, Tumin believes those rates will fall soon, so he encourages consumers to take advantage of high rates and low fees now. He offers the following advice:

• Open a high-yield savings account. “The easiest and quickest way to maximize interest on deposit accounts is to open a high-yield savings account,” he says. “In 2024, it’s easy to find online savings accounts that pay interest rates over 5.00%.”
• When opening an online savings account, there’s no need to switch banks. “In most online savings account applications, an existing checking account can be used as the source of funding for the new online savings account,” he says. “Future deposits and withdrawals can be initiated from the online bank’s account platform that electronically transfers funds between the online savings account and checking account.”
• Opening an online savings account may be worth the extra work. “Maintaining an extra bank account requires slightly more work, but that can mean more interest income than what could be earned with a brick-and-mortar savings account,” he says. “That’s especially the case in today’s high interest rate environment. With the average brick-and-mortar savings account paying only 0.52%, depositors may be able to earn 10 times more interest in an online savings account compared to an average savings account at a brick-and-mortar bank.”

Methodology

Researchers calculated the aggregate amount of interest paid by Federal Deposit Insurance Corp.-insured banks on domestic deposit accounts, fees charged to deposit accounts and the total number of deposit accounts using quarterly bulk call report data.

Annualized numbers represent the sum of interest and fees in each quarter.