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The pandemic has impacted the financial lives of millions, including where they choose to house their savings. According to a new survey by NerdWallet and Marcus by Goldman Sachs, 39% of Americans who say they’re currently saving money — referred to as “savers” throughout this report — have opened a savings account since the pandemic began.
In a survey commissioned by NerdWallet in conjunction with Marcus by Goldman Sachs and conducted online Nov. 30 to Dec. 2, 2020, by The Harris Poll, we asked more than 3,000 U.S. adults what they’re saving for, which savings accounts they use and how the pandemic has impacted their banking habits.
Majority are saving for something: Close to 9 in 10 Americans (87%) are currently saving money for something; some of the top savings reasons are emergencies (39%), just to grow their general savings (38%), retirement (36%) and travel/vacation (31%).
More have brick-and-mortar savings accounts than online-only: Over 7 in 10 Americans (72%) say they have at least one savings account. Savings accounts with traditional brick-and-mortar banks are the most popular choice (50%), but a quarter of Americans (25%) say they have savings accounts with an online-only bank.
Pandemic spurs some to open savings accounts with online-only banks: More than 1 in 5 savers (22%) have opened a savings account with an online-only bank since the pandemic began, with millennials more likely to have done so than older generations — 35%, compared with 23% of Gen Xers and 8% of baby boomers.
Convenience and higher interest top the reasons for opening online-only savings accounts: Of savers who opened a savings account with an online-only bank since the onset of the pandemic, over half (52%) say they did so because they wanted the convenience of online banking services, while 2 in 5 (40%) say it’s because online-only banks tend to offer higher interest rates.
Some are saving more because of the pandemic: About a third of Americans (32%) say that due to the pandemic, they’re saving more now than they were before.
Most Americans saving money for something
Almost 9 in 10 Americans (87%) say they’re currently saving for something, be it potential future emergencies, something fun or just to grow their savings balances.
“Even if you don’t know exactly what you want to save for, it’s never a bad idea to have cash put away,” says Chanelle Bessette, a banking expert at NerdWallet. “The pandemic has shown that life can be unexpected, so whether you’re struggling with a job loss or unexpected medical bills — or even if you’re saving for something fun like a future wedding or post-COVID vacation — liquid cash savings are so important to your financial portfolio.”
Over 1 in 5 savers opened online-only savings account during pandemic
According to our survey, a quarter of Americans (25%) currently have a savings account with an online-only bank, while 50% of Americans have a savings account with a traditional brick-and-mortar bank. (Ten percent have both, and 28% report that they don’t have any savings accounts.) Online-only banks tend to have few, if any, physical branches, and customers of these banks handle their accounts through an app or bank website. Traditional brick-and-mortar banks may have online services as well, but they also have branches where customers can go to deposit cash and access other bank services. The upside of an online-only bank is that it tends to offer higher interest rates and lower fees than a brick-and-mortar bank.
Thirty-nine percent of savers say they’ve opened a new savings account since the pandemic began — 22% have opened an account with an online-only bank and 23% have opened an account with a brick-and-mortar bank.
“Overall, brick-and-mortar banks hold roughly double the number of accounts of online-only banks,” says Dustin Cohn, head of brand marketing for the consumer and wealth management division of Goldman Sachs, which includes Marcus. “However, online banks have kept pace with brick-and-mortar over the past year, with a nearly even split in new accounts opened since the pandemic began.”
Millennials are leading the charge to open online-only savings accounts since the pandemic’s onset — 35% of millennial savers have done so, compared with 23% of Gen X savers and 8% of baby boomer savers.
Savers who’ve opened online-only savings accounts since the pandemic began have various reasons for doing so. The most frequently cited reason is wanting the convenience of online banking services (52%).
Online-only banks are an attractive option as the pandemic continues, with almost a third of Americans (31%) saying that, due to the pandemic, they think banking with an online-only bank is more convenient than banking at a brick-and-mortar bank. And more than 1 in 5 Americans (22%) think online-only banks are safer to bank with than brick-and-mortar banks due to the pandemic. Over half of Americans (52%) report that they’re going into physical bank branches less often since the pandemic began.
Most taking financial action because of pandemic
The coronavirus pandemic has reduced many Americans’ ability to save. But 32% of Americans say that due to the pandemic, they’re saving more now than they were before, possibly because they’re spending less on costs like commuting, travel and extracurricular activities.
The majority of Americans (78%) report that the pandemic has spurred them to take some sort of financial action. Specifically, 2 in 5 (40%) say they’ve paid closer attention to their finances, while a third (33%) have tried or increased usage of a digital banking service, like mobile deposits or online bill pay.
Gen Zers and millennials are more likely to have taken financial action due to the pandemic than older generations — 86% each, compared with 80% of Gen Xers and 72% of baby boomers. Notably, Gen Zers and millennials, who are perhaps newer to managing their money than Gen Xers and baby boomers, report that they’ve started saving or saved more for emergencies (37% and 40% vs. 29% and 26%) and sought to understand more about their finances (28% and 29% vs. 20% and 16%) at higher rates than older generations.
Brick-and-mortar banks preferred choice for many over online-only
Two in 5 Americans (40%) say they have savings accounts with brick-and-mortar banks and not online-only banks. The No. 1 reason they cite for this is that their brick-and-mortar bank offers all of the online services they need or want (52%).
What savers and would-be savers can do
Pick a savings goal
Consistently saving money toward a goal is a good habit to get into, not just in order to reach that goal, but also because it means you’re living off less than you’re making. In other words, your finances can take a hit, like minor income loss or an unexpected expense, without becoming completely derailed. If you aren’t currently saving but have money to do so — whether it’s $5, $50 or $500 a month — choose a goal that’s important to you and start putting money toward it.
“One of the easiest ways to save money is by never letting it enter your checking account,” Bessette says. “Most employers who offer direct deposit allow their employees to divert their paychecks into multiple bank accounts. You can set up an entirely separate savings account and deposit a percentage of your regular earnings there so that you never have to worry about it getting mixed in with your day-to-day spending. If you want to make it even harder to dip into your savings, you can set up the account at a different bank from your checking so that it’s a bit more difficult to transfer your funds back and forth.”
Choose a bank that meets your needs
Brick-and-mortar banks have physical bank branches that allow you to deposit cash and access specialty banking services like safe-deposit boxes. Online-only banks generally don’t have branches, so you’ll manage your money from an app or website. Wherever you bank, make sure you have convenient ATM access if you need it and that standard security measures, like encryption, are in place for online banking.
Know that online-only banks are a secure option
Around 1 in 6 Americans who have savings accounts with a brick-and-mortar bank and not an online-only bank (16%) say it’s because they don’t think online-only banks are secure. In fact, online banks often employ similar cybersecurity measures as traditional brick-and-mortar banks and most are insured by the Federal Deposit Insurance Corp.
“Make sure you choose a bank with a solid reputation for security by searching for whether it’s had any major data breaches and by browsing its app ratings,” Bessette says. “You should also follow strong security protocols on your end: Use two-factor authentication, don’t use unsecured Wi-Fi networks to log in to your bank accounts and make sure no one is watching you enter your bank login credentials.”
Make the switch, if necessary
If you decide you want to open a savings account at a new bank, you may be daunted by the process of switching from your current financial institution. Check out NerdWallet’s guide on how to switch to a new bank to avoid overdrafting or getting hit with unnecessary fees.
This survey was conducted online within the United States by The Harris Poll on behalf of NerdWallet and Marcus by Goldman Sachs from Nov. 30-Dec. 2, 2020, among 3,034 U.S. adults ages 18 and older, among whom 2,642 are currently saving money. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables and subgroup sample sizes, contact Chloe Wallach at [email protected].