Checking Account Make-Up is Changing

Tiered interest checking has declined 4.7% since July 2009.

June 6, 2011

A new analysis from Market Rates Insight reveals that the make-up of checking-account types offered by banks and credit unions has changed since the end of the recession in July 2009.

The types of checking accounts that require deeper and wider interaction and commitment to banks and credit unions have increased.

High-balance checking accounts now make up 18.6% of total accounts offered, a 3.5% increase. Senior accounts now make up 9.3, up 1.3% percent, and asset management accounts comprise 8.1%, up 0.9%.

The greatest increase in the number of checking accounts offered occurred with caps/rewards accounts—up 3.8% since the end of the last recession. This type of account offers relatively higher interest rates and rewards for the use of debit or credit cards linked to this account.

Tiered interest checking, which traditionally was the work-horse of transaction accounts, has experienced the largest decrease since the end of the last recession, falling 4.7%.

Still, this account type makes up the largest percentage of accounts offered by financial institutions: 38.3% of all checking accounts.

Other checking account types that have declined include tiered interest relationship accounts (-3%) and interest accounts (-1.1%).

The remaining account types—interest relationship, guaranteed rate, and new money make up less than 2% of the total checking accounts offered.

“The four types of checking accounts that have shown an increase have one thing in common,” says Dan Geller, Ph.D., executive vice president at Market Rates Insight. “They’re all designed to increase the relationship and contact surface with customers, which translates into greater fee revenue for the institution. The rewards account requires debit or credit card participation, high balance requires a minimum deposit, senior accounts come with direct deposit of Social Security or annuities, and asset management checking requires a brokerage account.”

Click here for the complete analysis [pdf].