Over the past 18 months, COVID has upended all aspects of American life, including how we bank. And that, in turn, has shifted what we look for in the place where we park our money and which institutions serve us best.
Take savings, for instance. While the personal savings rate is down from the stratospheric high of 33.8 percent recorded early in lockdown last year, Americans are still setting aside cash at historically high rates: nearly 10 percent recently. But just as our need to earn a decent return on our savings has rarely been higher, many banks have slashed rates; the average savings account pays out just 0.06 percent now, and many of the largest banks pay nothing at all.
“Interest rates are even lower than in the seven years following the Great Recession when the Federal Reserve also dropped rates to around zero,” says Ken Tumin, founder of the bank comparison site DepositAccounts.com.
That makes it all the more important to seek out institutions that pay a decent rate, while also keeping fees to a minimum, so you keep more of what you earn. In that respect, there’s a silver lining to current low-rate conditions as banks look for other ways to woo new customers. “Some are lowering fees, eliminating maintenance fees or offering better overdraft policies,” Tumin says.
Also in demand these days: institutions that make it easy to bank remotely. Nationwide, 41 percent of Americans are now digital-only bank customers, J.D. Power reports, up from a third pre-COVID. About four in 10 who made the switch during the pandemic say they won’t go back, says Paul McAdam, senior director of banking intelligence at J.D. Power.
To keep online users happy, banks are improving apps and adding features, like budgeting tools, options to round up debit card transactions to the nearest dollar to boost balances, and offering advice to help you reach financial goals like improving your credit score. “Banks are focusing on digital tools that help customers improve their financial wellness,” says McAdam. “A lot of this work began before the pandemic, but over the past year or so, the industry has accelerated their efforts.”
To help you make sense of the new banking environment and find an institution that best suits your needs, Newsweek has partnered with LendingTree, the online marketplace and comparison site for financial services, for our annual Best Banks rankings. We assessed thousands of FDIC-insured banks and credit unions, and the savings and checking accounts they offer, based on more than 50 different factors to land on best-in-class options in 26 different categories. One or more of these winning banks may be the perfect choice for you.
—Kerri Anne Renzulli, Senior Reporter