Personal Finance

Survey Finds Majority of Millennials Willing to Change Banks

As the year comes to a close and Americans set resolutions, it looks as though a number of consumers will be seeking a new banking account in 2023. A recent survey conducted by the FinTech M1 found that 71% of Millennials surveyed would consider changing their primary bank in order to receive a higher annual percentage yield (APY) on their funds. That figure rose to 79% among those intending to retire early (before their 60s).

In terms of how much of an increase they’d require to consider a change, 40% said an APY difference of less than 1.5% would be enough for them the switch. Also notable is that 31% of respondents were more likely to move their primary financial institution now than they were 12 months ago.

While 2022 began with low savings account interest rates, a series of aggressive increases from the Federal Reserve have sent APYs soaring. For example, online banks such as Discover and Ally have recently increased the rate on high-yield savings accounts to 3.30% APY. However, many larger banks have kept their savings account rates steady at 0.01% APY, bringing the national average to 0.19% according to Bankrate.

Offering commentary on the survey results, M1’s founder and CEO Brian Barnes explained, “Millennials may have a reputation for prioritizing short-term experiences over long-term savings, but what we’ve found is that they are overwhelmingly ready and willing to make sacrifices for their long-term financial health.” Barnes continued, ” What’s missing from their financial picture is a system of products that works as hard for that financial future as they do. The largest banks in the American financial system refuse to significantly raise savings rates to a meaningful degree because of the impact on their bottom line, even as inflation continues to grow and central bank rates continue to rise. They are betting on inertia to carry them through the next economic cycle, but our survey finds that consumers may not be willing to stick around this time.”

Not coincidentally, this survey from M1 comes as the platform intends to launch a high-yield savings account early in 2023. According to the company, those enrolled in its M1 Plus membership will be able to earn 4.50% APY on their cash once the account launches. However, the base rate for non-Plus members is expected to be 0.50% APY. Currently, an M1 Plus subscription comes at a cost of $125 annually.

With APYs among online institutions now proving significantly higher than what larger, brick-and-mortar banks are offering, it’s understandable that frustrated savers would be considering a change. At the same time, since APYs can change over time, those seeking better rates should be sure to consider all that a banking account has to offer before deciding to go “all-in” on one option. Nevertheless, given today’s technologies and the diversity that FinTech brings, there’s certainly no shortage of options available to those who want to earn more on their money in 2023.