According to a recent report from Yahoo Finance, depositors are embracing credit card companies for the saving options they have made available to consumers. People are switching banks, mainly due to better APY rates. Consumers are choosing to grow their savings further during a time of inflation. Here’s what you need to know.
Credit Cards Companies Offering Better Savings
Financial institutions are widely recognized for their credit card products. However, banking products have lived in their shadow. Since last year, many consumers have taken notice of the new savings products credit card companies offer. As a result, savers are flocking to these financial institutions and making use of their new or improved financial products: high-yield savings accounts.
Deposit Trends For Major Credit Card Companies
Many credit card companies noticed deposits trending up in the first quarter of 2023. American Express saw the highest growth in comparison to the other major credit card institutions. Amex deposits increased by 33% year over year in Q1 2023. Discover also saw a rise in deposits, reaching a record of 18% year over year. Additionally, Synchrony Financial deposits increased by 17%. And Capital One deposits rose by 12% in Q1 2023.
| American Express | Discover | Synchrony Financial | Capital One |
| 33% year over year | 18% year over year | 17% year over year | 12% year over year |
On the contrary, there were a few banks that saw little to no change in deposits. Starting with Bank of America which has instead seen almost an 8% drop in deposits since Q4 of 2022. Similarly, Wells Fargo deposits have decreased by 7% since Q1 of 2022. The only institution to remain steady is CitiGroup which has seen no major changes in deposits versus the prior-year period and is currently at 6% year over year.
| Bank of America | Wells Fargo | CitiGroup |
| Declined almost 8% since Q4 2022 | Declined 7% since Q1 2022 | Currently at 6% with no major changes |
“People are feeling more comfortable going to online-only banks to chase higher returns and I, myself, moved from a big mega bank to an online only bank and have been very happy with the returns on it,” Matt Schulz, chief credit analyst at LendingTree. Source.
Higher-Yielding Savings Driving Consumer Depositing Action
Although depositors have been switching up their bank choices for savings since last year, the trend has truly fast-tracked in Q1 2023. Especially with the recent banking crisis in March of 2023. Consumers simply have the inclination to find higher-yielding deposit accounts.
The economic climate is leading Americans to think strategically about where they store their money. The major banks have been slow to change up the yields on their savings accounts since the start of rising interest rates last year hiked by the Feds in an effort to take action against inflation.
As a result, credit card issuers have stepped up their game with higher-yielding savings products and consumers are here for it. For example, according to a Forbes report, two unnamed sources familiar with the subject claimed Apple Card’s new high-yield savings account drew in nearly $1 billion in deposits in the first four days after its launch in April 2023.
Apple’s savings product is from Goldman Sachs and offers a 4.15% APY – ten times the national average of 0.40, according to the FDIC Bankers Resource Center. Other accounts like Wells Fargo’s Way2Save savings account offer 0.15% APY and requires a $25 deposit.
Related Article: Americans Saving Less & Buried in Credit Card Debt
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