In a previous column we examined data showing that only 21% of big banks offer free checking accounts. The data below demonstrates that eliminating free checking accounts has made big banks less appealing to many mass market consumers.
In May 2013, FindABetterBank.com users who selected an account with a big bank had daily balances that were 78% higher than mass market shoppers choosing accounts with small institutions (less than 100 branches). It’s clear that without free checking products, big banks are pushing many mass market shoppers to other institutions.
| Large Banks (1000+ branches) |
Regional Banks (100-999 branches) |
Small Institutions (less than 100 branches) |
Direct Banks | |
|---|---|---|---|---|
| Mean Lowest Daily Balance | $1,657 | $1,585 | $929 | $1,142 |
Source: FindABetterBank.com May 2013
Shoppers with low balances are most likely to choose free checking accounts – which most big banks don’t offer – and shoppers with higher balances are more likely to choose fee-based accounts:
- 54% of shoppers with lowest daily balances under $1,000 chose a free checking account compared to 20% of shoppers with balances of $5,000 or more.
- 67% of high balance shoppers chose checking accounts that have monthly fees of $10 or more – in most cases their high balances will enable them to avoid the fee. Only 16% of low balance shoppers chose accounts with high monthly fees.
| Type of account selected | $1,000 or less |
$1000 to $2000 |
$2000 to $5000 |
Over $5000 |
|---|---|---|---|---|
| Free checking | 54% | 45% | 37% | 20% |
| $10 or less monthly fee | 30% | 32% | 26% | 13% |
| $10 to $20 monthly fee | 14% | 19% | 31% | 34% |
| $20 + monthly fee | 2% | 3% | 6% | 33% |
Source: FindABetterBank.com May 2013