Momentive study: credit unions win on lower fees and better interest rates

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Momentive study: credit unions win on lower fees and better interest rates

Credit unions deliver on lower fees and better interest rates, online access

Zoe Padgett

November 4, 2022 | 4 min read

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Key findings:

  • One in three Americans have opened a new checking or savings account in the last 12 months, and another 45% are planning to open a new account in the next year
  • About half (55%) of young adults ages 18-34 bank with a traditional bank, four in ten (40%) bank with an online-only bank, and just under a third (31%) bank with a credit union
  • Among credit union members, almost half (47%) cite customer service as a main reason for banking with a credit union, along with lower fees (46%) and better interest rates (45%)
  • Nearly three-quarters (73%) of credit union members say that their credit union offers online access, and 67% have mobile app access; fewer have online chat or messaging (48%), online budgeting tools (36%), or integration with other web-based services (24%)
  • Customers cite fee-free ATM networks (56%), online access (56%), and physical locations (48%) among their top priorities, and 80% say it’s very or somewhat important that their bank has physical locations

Americans open new checking and savings accounts

Most Americans have at least one bank account, according to our most recent findings from a study of U.S. adults. Only 8% of Americans lack a checking or savings account, with 60% having both, 24% having a checking account only, and 8% having a savings account only. 

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One in three Americans have opened a new checking or savings account in the last 12 months, and another 45% are planning to open a new account in the next year. Reasons for opening a new account vary widely, with the biggest reasons being better terms (31%), attractive sign-up offers (31%), and simply needing a new account (31%). 

Opening a new bank account has never been easier – almost half (43%) of those who opened a new account in the last 12 months did it online, including 13% who opened their new account through an app. Comparatively, 39% opened their new account in-person, and 17% by phone. Of those who opened an account online, 57% did not speak to a real person while opening their account. Opening a new account online is quicker and easier, with 65% saying opening their account online took less than one hour (vs. 57% of those who opened their account in-person or by phone), and 70% saying it was “very easy” to open their new account (vs. 59% for in-person or by phone).

Young people less likely to bank with traditional banks

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Younger Americans are more likely to flock to online-only banks and credit unions when compared with older age groups. About half (55%) of young adults ages 18-34 bank with a traditional bank (vs. 69% of those 35-64 and 79% of those 65 and up). Four in ten (40%) bank with an online-only bank (vs. 34% of those 35-64 and just 12% of those 65 and up), and just under a third (31%) bank with a credit union (vs. 28% of those 35-64 and 27% of those 65 and up). 

Credit union members show loyalty

While 28% of Americans bank with a credit union, only 20% say a credit union is their main financial institution. These credit union members may be more loyal, though. Among those who say a credit union is their main financial institution, 51% are likely to consider switching to a new bank or credit union if offered more benefits that could help make their money go further, compared with 60% of traditional bankers.

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Looking at the Net Promoter Score® across bank types, credit unions (+39) and online-only banks (+39) are rated higher than traditional banks (+34). Banks beat out credit unions in their availability of free-to-use ATMs (45% vs. 19%), customer service (32% vs. 25%), and data privacy (29% vs. 18%); credit unions win out for their fees (28% vs. 35%) and interest rates (27% vs. 38%). However, among credit union members, almost half (47%) cite customer service as a main reason for banking with a credit union, along with lower fees (46%) and better interest rates (45%).

Credit unions offer key digital banking services

Credit unions are offering the digital services that are most important to customers. Nearly three-quarters (73%) of credit union members say that their credit union offers online access, and 67% have mobile app access. These are critical services – 56% of bank customers say online access is one of the features they care most about in their bank or credit union, and 46% say the same about mobile app access. Fewer say their credit union offers online chat or messaging (48%), online budgeting tools (36%), or integration with other web-based services (24%).

Physical branch locations still have a major role to play

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While digital services are critical, physical branches are still important to most banking customers. Customers cite fee-free ATM networks (56%), online access (56%), and physical locations (48%) among their top priorities. But, 80% say it’s important that their bank has physical locations, showing that customers want both – an easy way to access their accounts online plus the ability to go into a branch location if need be.

Customers want debit card rewards

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Debit card rewards programs could be another differentiator for credit unions. More than half (57%) of credit union members are offered a debit card rewards program, compared with 48% of traditional bank members. These programs could reach many customers, as 68% say they “always” or “frequently” use a debit card for purchases. Younger customers are the most interested in debit card rewards, with 84% of those ages 18-34 very or somewhat interested in such a program, along with 82% of those ages 35-64 and 60% of those ages 65 and up.

Net Promoter Score and NPS are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc

Read more about our polling methodology here

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