Changing regulatory standards have forced financial institutions to reconsider their business models, which means that retail banking is simply not a priority for many banks today. WalletHub’s 2014 Banking Landscape Report highlights the changing retail financial landscape, and points out that credit unions today typically offer lower account fees, more features and higher interest rates than banks.
In its study, WalletHub looked at the fees, features and rates associated with more than 2,000 checking accounts, savings accounts, money market accounts and CDs from financial institutions of all sizes, online and brick-and-mortar and both shareholder- and member-owned (credit unions).
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Credit unions vs. banks
The WalletHub 2014 Banking Landscape Report highlighted that credit unions are 72% less expensive than national banks, offer consumers 105% more features and have 562% higher interest rates.
Compared to small banks, credit unions are still 48% less expensive, provide 46% more features to choose from and have almost 700% higher interest rates.
The report notes that there are some significant variations in fees and rates on a regional basis.For example, interest rates across checking and savings accounts are higher in the Southwest, while the West has the lowest.
Moreover, checking accounts in the Midwest offer the most features and charge the lowest fees, while checking accounts in the West offer the least number of features, while accounts in the Southwest and Southeast levy the highest account fees.
Advice for consumers
The WalletHub report offers some advice for consumers:
- In general, consumers should use online checking accounts, as online accounts are 19% cheaper than branch accounts, have 20% more features, and have a 122% higher interest rate on average. Of note, in many cases online savings accounts actually have lower interest rates than online checking accounts.
- Business accounts should usually be avoided. Business banking accounts are 46% more expensive on average, provide 4% fewer features, and offer 57% lower interest rates than typical consumer accounts. Small business owners should consider personal online checking accounts if possible.
- College students should definitely take advantage of student checking accounts for easy, low-cost access to cash and many premium features. The WalletHub report notes that student checking accounts are 66% cheaper than the average personal account and offer 28% more features, but have 86% lower interest rates. Student savings accounts, on the other hand, offer some of the highest interest rates available.