Financial Account Confusion Could Cause Setbacks Amid Rising Economic Uncertainty, Santander Survey Finds
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52% do not realize a high-yield savings account is a good place to keep emergency savings, as many are unaware of
FDIC insurance protection.
- Only 35% recognize that high-yield savings accounts have less risk than investment accounts.
- Digital engagement is preferred for managing everyday finances, including viewing account balances (74%), while in-person interaction is favored for high-touch services, such as receiving financial advice (64%).
- Openbank by Santander offers a simple and secure digital-first experience along with a competitive rate on high-yield savings.
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“During times of volatility, it is even more important for consumers to be equipped with the information they need to make sound financial choices,” said
The findings are part of the fifth installment of Santander Bank’s Openbank Growing Personal Savings (“GPS”) Tracker, a research series exploring Americans’ spending and savings habits.
Consumers Blur the Line Between Saving and Investing
The survey found consumers may be mistaking higher-yielding bank accounts, such as high-yield savings accounts, with investment accounts that may involve risk of loss of principal. For instance, 35% realize high-yield savings accounts are safer than accounts that have various investment options, such as stocks and bonds, and four in 10 (42%) know that high-yield savings accounts are generally predictable from month-to-month. This lack of knowledge of high-yield savings offerings could lead savers to keep their money in lower-yielding accounts that they incorrectly view as less risky.
Americans also lack an understanding of the risks of investing, which could expose savings to market volatility. More than four in 10 (43%) do not realize accounts with various investment options involve risk of loss, including 13% who do not believe there is any risk and 30% who do not know. Meanwhile, just over half (54%) believe the stock market is generally unpredictable month-to-month, with fluctuations that can earn compelling gains over time, but can also lead to near-term losses. Some consumers with brokerage accounts are exposing their savings to this volatility by using these accounts for shorter-term goals, such as emergency savings (34%) or vacation and leisure expenses (18%), subjecting them to a potential downturn when they need to access their funds.
Consumers
While most investors remained undeterred amid stock market losses and economic uncertainty in Q1—with just 17% reducing regular contributions to investment accounts—savers were quick to adjust. Nearly six in 10 Americans (58%) shifted their savings approach during this time, as more focus on saving for emergencies—the most common change since the start of the year. This shift may be needed, as less than half of consumers (45%) are comfortable with the emergency savings they have, and 51% do not have at least three months’ worth of emergency savings available.
Americans can accelerate progress toward their goals by using higher-yielding savings options—such as high-yield savings accounts or certificates of deposit (CDs)—but a majority (65%) do not have one of these accounts. Instead, most savers use low-growth alternatives—including traditional savings accounts (39%) or checking accounts (32%)—as their primary savings destination. Seven in 10 do not realize there are high-yield savings accounts that pay at least a 4.00% Annual Percentage Yield (APY), roughly 10x the national average2.
Meeting Customers Where They Are and Where They Are Going
Financial institutions have an opportunity to help customers bridge this knowledge gap, but they must meet them where they are, with digital channels becoming increasingly popular. Most bank customers already favor digital interactions for staying on top of everyday finances, including viewing account balances (74%) and transferring money between accounts (69%), while in-person engagement is generally preferred for high-touch services, such as receiving financial advice (64%) or opening an investment account (64%). The trend continues to point toward digital platforms, with Gen Z and Millennials being more likely to skew digital than older generations for actions such as opening a checking or savings account (49%) and getting account assistance (46%).
“The findings reinforce our aspirations to transform into a full-service digital bank with branches, offering customers flexibility and peace of mind knowing their money is with a bank that is part of one of the largest financial institutions in the world,” Bhatia said. “Traditional banks lack the digital capabilities of fintechs, while fintechs do not offer in-person interaction customers may sometimes require. Openbank blends the agility of a fintech with the personal touch of an in-person experience, allowing us to better meet consumers’ evolving needs.”
Methodology
This research on growing personal savings, conducted by Morning Consult on behalf of
The full report and more information about the
1
2The typical savings account has an Annual Percentage Yield (APY) of 0.41%, according to the
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andrew.simonelli@santander.us
caroline.connolly@santander.us
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