2019 Banking Report: Many Americans Don’t Understand the Basics of Banking

How does your banking knowledge compare to the rest of America?

Most Americans have bank accounts. But whether they have a good understanding of those accounts is up for debate, as findings from a new GOBankingRates survey suggest.

GOBankingRates surveyed more than 1,000 Americans to learn about their banking habits, preferences, fears and knowledge. Overall, the survey found that many Americans don’t understand certain basic banking concepts, such as interest rates. And there are several misconceptions about online banking that might be preventing many Americans from taking advantage of the benefits online banks have to offer.

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Table of Contents:

Summary of Survey Results

Here’s what GOBankingRates found out about Americans’ banking preferences and knowledge of banking basics.

  • One-third of Americans don’t know what type of bank account usually has the highest interest rate. However, when asked what feature would entice them most to open a new bank account, respondents were more likely to say good rates than any other feature.
  • Nearly half of respondents said their preferred method of banking is in person at a branch or ATM compared with 25 percent who said they preferred banking with a mobile app. However, 76 percent said they wouldn’t open an account with a bank that doesn’t have a mobile app.
  • Americans’ biggest fear about banking is someone stealing their account or personal information. In fact, 42 percent of Americans said they are more afraid of someone stealing their bank account information than not having a job, never being able to retire and incurring excessive bank fees.

Discover: 10 Best Checking Accounts of 2019

Insights on Americans’ Banking Knowledge: Most Don’t Understand Rates and Online Banking

There appears to be some confusion among Americans about which types of accounts offer the best interest rates. When asked what type of bank account they think has the highest APY/savings rate, 33 percent of respondents said they didn’t know. Another 27 percent said they thought checking accounts offer the highest yield.

Only 10 percent of respondents said high-yield savings accounts have the best rates, 6 percent said CD accounts and 4 percent said jumbo CD accounts. All of these deposit accounts typically have higher yields than checking accounts.

Young adults ages 18 to 24 years old had the highest percentage of respondents who said they didn’t know what type of account usually has the highest savings rates at 43 percent. However, baby boomers ages 55 to 64 had the second-highest percentage of respondents at 36 percent. And women were less likely than men to know which accounts have the best rates — 39 percent versus 26 percent.

The survey also found that a majority of Americans don’t think that online banks have higher rates than brick-and-mortar banks. Only 31 percent said online banks do have higher rates than traditional banks, which typically is correct.

“According to the FDIC, the average interest rate on savings accounts is 0.09 percent, with many of the largest financial institutions paying as little as 0.01 percent,” said Diane Morais, president of consumer and commercial banking products at Ally Bank, which was named by GOBankingRates as the best online bank of 2019. “Conversely, the average interest rate among the top online banks is 20 times higher than the national average of all banks.”

Many Americans Don’t Know Which Bank Accounts Can Grow Their Savings Faster

Although the survey found that more than a quarter of Americans think checking accounts usually offer the best rates, many checking accounts don’t even pay interest. Among those that do, the average rate paid is just 0.06 percent, according to the Federal Deposit Insurance Corp.

The average rate on savings accounts is 0.09 percent, while the average rate on money market accounts is 0.17 percent. Rates vary on certificates of deposit depending on the length of time you keep your money in the CD. The longer the term, the higher the rate on the CD. The average rate on a jumbo CD that requires a deposit of $100,000 or more and has a 60-month term is 1.29 percent. That’s just an average, though. The best CD accounts have even higher yields.


Americans might not know what type of account tends to offer the best rate because the survey found that there is confusion about how rates work. When asked what option they would choose if they were to open a checking or savings account, 36 percent of respondents opted for an account with a 1.25 percent APR, while about a quarter said they would choose an account with a 1.25 percent APY. Although the percentages are the same — and were the highest percentages respondents could choose — there is a difference between the two.

APR, or annual percentage rate, refers to the interest you pay on a loan. APY, or annual percentage yield, refers to the total amount of interest you earn on a deposit, taking into account the effect of compounding interest.

“When you shop for a savings account, it’s important to compare APY,” Morais said. It’s also important to pay attention to how frequently interest compounds on an account. Your money will grow faster in an account that compounds daily.

Common Online Banking Myths Are Still Prevalent

In addition to not realizing that online banks tend to offer higher savings rates, many Americans had other misconceptions about these financial institutions. The survey found that a quarter of respondents said online banks have more fees than brick-and-mortar banks and are not FDIC-insured, which is false. Another third also wrongly think online banks are less safe than brick-and-mortar banks. And less than half of respondents believe it is possible to withdraw money from online banks.


Many online banks are among the finalists in GOBankingRates’ annual ranking of best banks because they have no monthly service fees and offer high savings rates. As for safety, online banks that are FDIC-insured are as secure as brick-and-mortar banks. FDIC deposit insurance will protect you if an FDIC-insured bank fails and will cover up to $250,000 in deposits per depositor.

Plus, you can access any money you deposit into an online bank just like you can at a brick-and-mortar bank. Online banks partner with ATM networks, which typically allow customers to access their money without fees. And online banks often reimburse customers for fees charged by out-of-network ATMs, up to a certain amount.

Biggest Fears Consumers Have When Banking: Data Breaches and Fraud

Of the following, what scares you the most when it comes to banking?
Draining my bank account by overspendingIncurring bank fees (e.g., overdraft fees)Losing my bank debit card and/or credit cardSomeone stealing money from my accountSomeone stealing my account and/or personal informationOther

Given all of the data breaches over the past decade, it’s not surprising that Americans’ biggest concern about banking is the security of their account. The survey found that 41 percent of respondents are most concerned about someone stealing their account or personal information. The second biggest fear among respondents is someone stealing money from their account, with 20 percent choosing this answer.

Older adults are much more likely to be worried about bank security than younger generations. The survey found that 53 percent of adults 65 and older, 42 percent of baby boomers ages 55 to 64 and 44 percent of Gen Xers ages 45 to 54 said that someone stealing their account information scares them most about banking. Women are also more likely than men to be worried about this –45 percent versus 38 percent.

Americans’ fears about banking security are warranted because 36 percent of financial services enterprises experienced data breaches in the past year, according to the 2018 Thales Data Threat Report. However, the report found that 84 percent of U.S. financial services enterprises are increasing security spending to combat data breaches. So banks are taking more steps — in addition to the ones they have in place — to protect customers’ personal information.

“As security concerns intensify, it’s paramount that we invest in infrastructure and technology that will protect consumer data,” said Jason Thacker, head of U.S. consumer deposits and payments at TD Bank, which was named the best national bank of 2019 by GOBankingRates.

Bank customers can take simple steps to protect their account information. For example, customers should use different usernames and passwords for each financial account. Passwords should also be a combination of uppercase and lowercase letters, numbers and symbols. If your bank offers a two-step verification process when logging into your account, use it for an extra layer of protection. Also, avoid accessing your financial accounts through public WiFi sources.

Americans Fear Theft Over Never Being Able to Retire, Have a Family and More

Of the following, what scares you the most in general?
Incurring excessive bank fees (e.g., overdraft fees)Never being able to retireNever falling in loveNever having a family or getting marriedNot having a jobSomeone stealing my bank account information or moneyOther

The survey found that more than 40 percent of Americans are even more afraid of someone stealing their bank account information or money than not having a job, never being able to retire and incurring excessive bank fees.

Again, older adults were more likely than younger adults to say that someone stealing their bank account information or money is their top fear in general. The survey found that 63 percent of adults 65 and older and 56 percent of adults ages 55 to 64 said they were scared most of someone stealing their bank information or money. However, men and women are nearly equally concerned — with 41 percent and 43 percent, respectively, saying they’re scared most of someone stealing their bank information or money.

Americans’ 2019 Banking Habits, Preferences and Goals

Despite fears about banking, the survey found that an overwhelming majority of Americans — 88 percent — have checking accounts. And most Americans seem to be happy with their current bank.

In addition to finding out what sort of accounts Americans have and whether they plan to stick with their bank, the survey identified people’s banking preferences and savings goals. What’s surprising is that their preferences and goals aren’t necessarily aligning with their banking choices and actions.


Americans Have Big Savings Goals for 2019 — But They Won’t Be Opening New Accounts

The survey found that Americans have a variety of savings goals for 2019 — the most popular of which is saving for emergencies, with 48 percent of respondents choosing this option. The second-most popular savings goal was a tie between saving more for retirement and saving more in a regular savings account.

However, about half of respondents don’t even have a savings account, the survey found. Only 10 percent said they have a money market account, 7 percent said they have a bank IRA and 6 percent said they have a CD account. And the majority of respondents — 84 percent — said they don’t plan on opening a new account in 2019.

Which of the following savings goals do you wish to achieve in 2019? Select all that apply.
Save more money in my regular savings accountSave more money for emergenciesSave more money for retirementSave more money so I can buy a houseSave more money for a vacationSave more money so I can make a luxurious purchaseOtherI don’t plan on saving
18 to 24 – Post-Millennial/Gen Z50%42%27%30%30%17%4%14%
25 to 34 – Millennials37%52%32%46%33%17%2%6%
35 to 44 – Younger Gen X40%43%35%25%32%10%4%13%
45 to 54 – Older Gen X30%49%39%25%25%11%3%15%
55 to 64 – Younger Baby Boomers26%50%40%12%21%7%4%17%
65 and Over – Older Baby Boomers27%49%24%2%14%2%6%23%

If Americans were to open a new account, though, the most popular feature that would entice them is good rates. The second-most popular feature that respondents said would entice them to open a new account is low fees. Younger adults were more likely than older adults to find these two features enticing. Older adults ages 55 and up, on the other hand, were more likely than younger generations to say that they wouldn’t open a new bank account.

Americans who want to save more for emergencies or other short-term goals should look for a high-yield savings account such as the ones offered by the banks with the top 10 best savings accounts of 2019. For retirement savings, Americans should take advantage of workplace retirement plans such as 401ks, if their employer offers this benefit. Otherwise, they should save in an IRA or Roth IRA — or a solo 401k or SEP-IRA if they are self-employed.

Most Americans Plan to Stick With Their Bank in 2019

Most Americans seem to be loyal to their bank. The survey found that 88 percent of respondents don’t plan on switching banks. Adults 65 and older are the most loyal, with 95 percent saying that they don’t plan on switching banks in 2019.

The survey found that the most common reason Americans chose their current bank is convenience. Customer service was the second-most common reason. Interestingly, Americans were less likely to say that they chose their bank because it offered good rates on deposit accounts and low fees, despite the fact that these two features were found to be the most likely to entice Americans to open a new account.

However, it might not be loyalty or satisfaction with the service that’s keeping Americans at their current bank. The survey found that 22 percent of respondents don’t want to deal with the hassle of switching banks. Considering that the survey found that respondents are paying an average of $7 in bank fees per month, many Americans could be losing money by staying at their current bank. With the availability of free checking accounts, some could be better off switching banks to avoid fees.

Traditional, In-Person Banking Is Still Preferred, But Consumers Want Mobile Options

Despite the rise of online banking, the survey found that the most popular method of banking is still in person. Nearly half of the respondents said they prefer to do their banking at a physical branch or ATM. A quarter of respondents said they prefer banking via a mobile app, and 26 percent said they prefer online banking.

“While most Americans embrace mobile banking technology, and some prefer to do their banking via digital channels, consumers still enjoy the in-person experience of walking into a branch,” Thacker said.

That might explain why a majority of respondents have deposit accounts with traditional banks and credit unions rather than online banks. The survey found that 63 percent of respondents have an account with a brick-and-mortar bank versus 32 percent who have an account with a credit union and 22 percent who have an account with an online bank.

What is your No. 1 preferred method of banking?
In person (at a physical branch or ATM)Mobile (via mobile app)Online (via web browser)
18 to 24 – Post-Millennial/Gen Z30%42%28%
25 to 34 – Millennials28%40%32%
35 to 44 – Younger Gen X36%33%31%
45 to 54 – Older Gen X57%21%22%
55 to 64 – Younger Baby Boomers63%15%23%
65 and Over – Older Baby Boomers63%14%22%

Although traditional banks tend to have an online presence, their brick-and-mortar locations are still a draw for customers.

“Our branches continue to be a place where customers can sit down with a banker and have a meaningful conversation about their finances to help them reach their goals, and a place where customers can find a friendly, helpful team member ready to assist in their time of need or answer questions they may have,” said Erin Constantine, head of consumer deposit products at Wells Fargo. Often, though, customers come to branches to get help with using the bank’s self-service digital tools such as online banking and mobile apps, she said.

In fact, the GOBankingRates survey found that 76 percent of respondents said they wouldn’t consider opening an account with a bank that doesn’t have a mobile app. Surprisingly, older adults are slightly more likely to shy away from banks that don’t have mobile apps. The survey found that 80 percent of adults 65 and older and 81 percent of adults ages 45 to 54 said they wouldn’t open an account with a bank that didn’t offer a mobile app.

“It makes sense that today’s on-the-go consumers expect a mobile app, and at the same time, continue to seek other channels for their banking needs,” Constantine said. “Our long-term trends indicate that our customers are increasingly seeking mobile banking and that they are becoming more and more comfortable with using it as a daily touch point for their finances.”

In general, banks — even traditional brick-and-mortar banks — have been adapting to meet customers’ preferences. “We’re constantly evolving our strategy to deliver services based on unique market demands — and away from a one-size-fits-all model,” Thacker said. “We recognize the importance of allowing customers to bank when, where and how they want.”

How to Find the Best Bank for Your Needs

Although the survey found that most Americans don’t plan on switching banks this year, they might be missing out on better rates and paying unnecessary fees by sticking with their current financial institution. Online banks tend to offer better savings rates and lower fees because they don’t have the high overhead costs that brick-and-mortar banks do. Credit unions also tend to offer better interest rates and lower fees because they are nonprofit organizations that exist to serve their members.

That’s not to say that you can’t find traditional banks with low fees and competitive rates. If you value in-person banking, a brick-and-mortar bank might be the best option for you. However, if your current bank charges high fees, doesn’t offer competitive savings rates and doesn’t provide features that make banking easier, such as a mobile app, consider shopping around for a new bank.

Click through to discover why 69 percent of Americans have less than $1,000 in savings.

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Methodology: This survey was commissioned by GOBankingRates and conducted by Survata. We surveyed 1,001 online respondents between Dec. 7, 2018 and Dec. 10, 2018. The survey asked respondents the following questions: (1) What type of bank account do you think usually has the highest APY/savings rate? (2) If you were to open a checking or savings account, which of the following options would you choose? (3) What type(s) of bank accounts do you currently have open? Select all that apply. (4) What is your No. 1 preferred method of banking? (5) What feature(s), perk or similar factor would entice you to open a new bank account (e.g., checking, savings, CD, etc.)? Select all that apply. (6) Which of the following reasons best explains why you chose your current bank? Select all that apply. (7) Do you plan on switching banks in 2019? (8) Do you plan on applying or opening a new bank account in 2019? (9) How much are you currently paying in bank fees per month (i.e., ATM fees, overdraft fees, minimum balance fees, etc.)? (10) Would you consider opening an account with a bank that does not have a mobile app? (11) Which of the following savings goals do you wish to achieve in 2019? Select all that apply. (12) What type of financial institution(s) do you have a deposit (e.g., savings, checking, etc.) account with? Select all that apply. (13) Which of the following statements do you think is true about online banks? Select all that apply. (14) Of the following, what scares you the most when it comes to banking? (15) Now, of the following, what scares you the most in general?

All information in this article is accurate at the time the study was conducted in January 2019. 

About the Author

Cameron Huddleston is an award-winning journalist with more than 18 years of experience writing about personal finance. Her work has appeared in Kiplinger’s Personal Finance, Business Insider, Chicago Tribune, Fortune, MSN, USA Today and many more print and online publications. She also is the author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances.

U.S. News & World Report named her one of the top personal finance experts to follow on Twitter, and AOL Daily Finance named her one of the top 20 personal finance influencers to follow on Twitter. She has appeared on CNBC, CNN, MSNBC and “Fox & Friends” and has been a guest on ABC News Radio, Wall Street Journal Radio, NPR, WTOP in Washington, D.C., KGO in San Francisco and other personal finance radio shows nationwide. She also has been interviewed and quoted as an expert in The New York Times, Chicago Tribune, Forbes, MarketWatch and more.

She has an MA in economic journalism from American University and BA in journalism and Russian studies from Washington & Lee University.