Pew’s August 2012 report on specialized senior checking accounts warned of higher fees and paltry benefits of such accounts offered by the 12 largest banks and credit unions in the nation. However, the relatively limited scope of the study led to questions of whether senior checking is truly as underwhelming as reported.
NerdWallet analyzed the checking account offerings at institutions in the 5 U.S. states with the highest proportional senior populations (Florida, West Virginia, Maine, Pennsylvania and Iowa). Within each state, we then gathered data from the top 20 credit unions by membership (per the NCUA) and the top 10 banks by market share of deposits (per the FDIC) to compare differences in senior accounts. A total of 100 credit unions and 41 individual banks were surveyed.
Banks and credit unions take different approaches
Credit unions prefer simplicity by more frequently offering completely free checking accounts for any age. On average, 89% of the top credit unions in each state offered either a senior checking account or a free checking account. Banks, on the other hand, averaged 62%.
Senior checking is more common at banks. On average, 40% of the top banks in each state offered designated senior checking, compared to just 20% of the top credit unions.
Who qualifies and is a senior checking account worthwhile?
Our study found that the average age to qualify for a senior checking account is 56. At that age, consumers have probably already found a bank or credit union they like and may be hesitant to change. If so, then switching to a senior checking account is only beneficial if it:
- Lowers or eliminates the monthly fee you currently pay (or eases the requirements to waive the fee) And/Or
- Provides significant benefits in the form of higher yields and discounted services (for example, safe deposit boxes) that you actually use
For more, read our FAQ post addressing the issue: Should I Get a Senior Checking Account?
Senior accounts may help you save, but not by much
Though the availability of senior checking differs greatly between types of institutions, there was no significant difference in fee reduction and requirements to waive fees (when a monthly fee applied). However, credit unions were more likely to offer higher rates and more varied bonus perks with a senior account.
|Fee Savings per month1||$3.81||$3.16|
|Min. Balance Requirement2||$583||$735|
|Added Perks – % of institutions who offered them|
|Safe Deposit Box Discount||14%||30%|
|Reduced ATM Fees||10%||10%|
|Premium Rates/Reduced Penalties for CDs||10%||5%|
|Other Unique Perks4||29%||5%|
1average monthly fee savings for choosing a senior account over the most comparable alternative
2average minimum balance required to waive a monthly fee for those accounts that charged one (typically $1,500 for regular accounts)
3average APY for those accounts that earned interest; credit unions imposed an average minimum balance of $1,000 to earn interest
4other benefits included: free AARP membership, prescription drug programs, insurance benefits, free retirement planning, free travel assistance, etc.
Results also differ between states
Florida, with the highest proportional senior population, was also (along with Iowa) the state whose financial institutions were most likely to offer a specialized senior checking account. However, when including free checking accounts, Florida drops to last place among the 5 states surveyed.
West Virginia and Pennsylvania, both the least likely to offer a senior account, were also the top two states by average yield offered with a senior checking account.
Iowa and Maine financial institutions were most likely to offer either a senior or free checking account to the older population. When it comes to fee savings, Iowa also came out on top by averaging over $5/month saved for those who chose a senior checking account over the comparable alternative.
|State||Senior Population (% of Total)1|
|2. West Virginia||16.0%|
|Senior Checking||Frequency of Availability|
|3. West Virginia||20%|
|Senior or Free Checking||Frequency of Availability|
|3. West Virginia||77%|
|Fee Savings2||Average Fee Savings|
|3. West Virginia||$2.60|
|Ease of Waiving Monthly Fee||Average Minimum Balance Required|
|1. West Virginia||$550|
|Yield||Average Senior Checking APY3|
|1. West Virginia||0.20%|
1According to 2010 census data
2average monthly fee savings for choosing a senior account over the most comparable alternative
3for those accounts that paid interest
What is the primary takeaway?
Seniors shouldn’t automatically assume that a checking account marketed specifically to their demographic would be in their best interests. Do your homework and weigh the costs and benefits of bonus perks vs. the chance of a fee, if one will apply. Those with a free checking account should be especially cautious. With fees on the rise, passing up an opportunity to bank for free may end up costing more than a couple extra benefits are worth.
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