But even before that, more retail banking customers said they were already withdrawing cash from their major bank accounts, according to new information from J.D. Power, which hopes the crisis will pass.
Rising interest rates are pushing customers to withdraw more money from low-yielding accounts, while inflation is reducing account balances, the consumer market analytics firm said in its annual bank satisfaction survey. rice field Released Thursday.
Nearly a third of people (30%) have moved money in their savings accounts from their primary account to another provider in the past three months, according to consumer survey fieldwork conducted about two weeks ago. said. According to Paul McAdam, senior director of banking at JD Power, its outbound amounts averaged about 40% of its balances.
In March 2022, 27% said they had moved their deposits out of their accounts. This is an average of 35% of accounts, either going to unspecified destinations or simply spent.
JD Power notes that the percentage of bank customers with at least $10,000 in major banks has fallen to 28% from 44% a year earlier.
Given how difficult it is for many people to part ways with their bank of choice, this comes at the expense of inflation and the attraction of higher APYs or conservative cash equivalents like money market mutual funds. Evidence of better returns from
The habit of moving money continued this month, McAdam said, even though the majority of consumers are confident they can withdraw money when needed.
In the same recent survey asking about savings on the move, 93% of bank customers said they were very or somewhat confident in their bank and their ability to withdraw their money, McAdam said. . “I don’t see anything out of the ordinary,” he said, later adding, “Your typical consumer trusts what this system says.”
The Federal Deposit Insurance Corporation covers deposits up to $250,000, but depositors at Silicon Valley Banks and Signature Banks say they can access all their funds beyond the $250,000 cap.
read: Bank failures have hit the deposit insurance fund $22.5 billion. Who pays?
McAdam said bank surveys are just a glimpse of consumer sentiment. For example, regular bank users may not need to worry about their deposit status in the same way as business owners. According to one survey, two-thirds of people say they have at least some trust in large national banks and smaller regional banks. YouGov poll.
People are getting smarter with the better rates out there – but there are certainly people who don’t realize they can get more out of it.
On the same day as the JD Power survey, a Barclays memo predicted a “second wave” of deposit outflows to money market funds after a “careless deposit rate.”
The annualized 7-day yield of the largest money market fund is currently 4.57%, according to. crane datafollowed by the money market fund industry.
During a series of Federal Reserve rate hikes, high-yield savings account APYs have outperformed traditional brick-and-mortar bank rates.
According to the National Bank, the average APY is currently 0.23%. Bankrate.com. The average APY for online high yield savings accounts is currently 3.5%, according to. DepositAccounts.com.
inflation price
When people withdraw money from their accounts, how many people are doing it to take advantage of other better rates or do it because they need more money to cover a higher price? It is difficult to discern what is going on.
According to a JD Power survey, the percentage of accounts with less than $1,000 in balances has risen from 17% last year to 30%.
Inflation has dragged American personal savings rates down from pandemic highs. When it was buoyed by stimulus and less places to spend money in a locked down world. The after-tax and expense savings rate was 4.7% in January, according to Department of Commerce figures. Bureau of Economic AnalysisThis is up from 3.4% in October but down from 7.5% in December 2021.
“The pandemic boost to savings has gone, wiped out … our data is tied to that,” says McAdam.
On Friday morning, consumers, investors and policy makers will see inflation again and its slow decline from 40-year highs. Economists surveyed by The Wall Street Journal expect the Fed’s preferred rate of inflation to rise 0.6 percentage points from January to February, up 5.4 percentage points year-on-year.
