(MP) In today’s low-yield world, how to you find high-yield savings rates in America’s best banks? The typical brick-and-mortar savings account now delivers a national rate of 0.06% and mere 0.81% in interest on a $10,000 balance, down from a measly 0.1% last year. MONEY PACERS sought out Forbes and GoBankingRates to find America’s best financial institutions and discovered that’s just measly $8 a year. And guess what? Checking accounts pay even far less. And we suspect yields will remain low until the Fed raises interest rates, which on average takes eight months for banks to amplify rates on money market accounts and 14 months for interest checking, based on a 2013 Fed study.
The penny-pinching payout banks offer creates the fat fees they demand even more horrendous. The maintenance fees on checking accounts run $14.89 a month on average—$179 annually. Avoiding the fees typically requires a $3,250 balance, up from $2,500 last year. (Generally, even signing up for regular direct deposits won’t cancel the fees anymore.)
Need cash? Almost 75% of best bank accounts still charge a fee if you utilize an ATM network. And those fees have risen to an average of $2.46 per withdrawal this year, MONEY PACERS, from $2.30 in 2015. Those dollars add up: Nearly a third of ATM withdrawals are from out-of-network ATMs, based on data from the National Information Center at the Fed.
Consumers appear to have become immuned—curiously, they even reported higher satisfaction with banking fees, says J.D. Power. “Customers adapt to it,” says Jim Miller, who covers banking services at J.D. Power. Customers also tend to underestimate how much they pay in ATM fees, according to GoBankRates.
There is a massive gap in size between the four biggest U.S. banks and everyone else. Wells Fargo WFC +1.96% with $1.75 trillion in assets is the fourth biggest bank and four times bigger than U.S. Bancorp, which ranks fifth in size. The entire Big Four, which also includes JPMorgan Chase JPM +0.47%, Bank of America BAC +1.07% and Citigroup C +0.84%, have a combined $8.1 trillion in assets. These four banks operate on a different business model with non-interest income often representing 60% or so of revenue, compared to 20% at many of the other top 100 banks.
None of the Big Four could crack the top 50, with Wells Fargo the top performer at No. 52. SNL’s Clark credits Wells’ strong management team for the company’s performance. Wells’ 17.6% return on average tangible common equity ranks 10th overall. JPMorgan ranks No. 62, followed by Citigroup at No. 74 and Bank of America at No. 90. Wells Fargo was the only one to post positive revenue growth over the last 12 months. Wall Street has a similar take on the Big Four. Bank of America and Citigroup are the cheapest stocks at 0.7 times book value. JPMorgan clocks in at 1.1 with Wells at 1.6.
Forbes rated the 100 largest brick-and-mortar banks based on assets, return on average, tier 1 ratio, efficiency ratio, and latest 12 months revenue growth and here’s the results. The banks were asked to verify details about account terms, ATM networks, branch hours, mobile app features, and other stuff.
Choosing your next bank is one of the most important financial decisions you’ll ever make, but the search can be time-consuming and tedious. You want a bank that offers personable service, along with financial products that meet your ever-changing needs. The good news is that help is available. GoBankingRates.com has also ranked the best banks of 2016, which can help you narrow down the best institutions — whether you’re looking to open a savings account, checking account or certificate of deposit account. These banks were selected based on various features, such as minimum deposit requirements, interest rates, account fees and more.
MONEY PACERS likes best banks based largely on maintenance fees and ease of waiving them, ATM fees, and checking account yields; savings account yields, preferential loan terms, ATM-fee reimbursements, and geographic reach were considered tiebreakers. Best stand-alone accounts were chosen based on yields, fees, and minimum balances and other restrictions.
For Best Mobile App, we considered banks with apps that offered the most important mobile banking features and checking accounts that met our fee and yield criteria, then tested the apps for ease of use. Convenience winners were chosen based on ATM networks, branch locations, and hours.
Here are GoBankingRates picks for the Best Banks of 2016:
|Ally Bank||CIT BANK||iGObanking.com|
|AloStar Bank of Commerce||Citibank||MySavingsDirect|
|American Express Bank||Discover Bank||Nationwide Bank|
|Arvest Bank||EverBank||PNC Bank|
|Bank of America||First Internet Bank||Sallie Mae Bank|
|Bank of Internet USA||First Midwest Bank||Simple Bank|
|Bank5 Connect||First Niagara Bank||State Farm Bank|
|Barclays Bank Delaware||FNBO Direct||Synchrony Bank|
|Capital One||Great Western Bank||U.S. Bank|
|Charles Schwab Bank||HSBC Bank USA||Wells Fargo Bank|