How bank closures are hurting consumers and what you can do about it


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It’s no secret that retail businesses sometimes struggle to find their place in the new reality as more and more services go digital. While many envision in-person shopping being replaced by online retailers, a similar trend is emerging for US banks as consumers continue to visit brick-and-mortar branches less frequently.

In some communities, neighborhood banks have had to close their doors, causing significant damage to the local economy and exacerbating existing financial inequalities.

Under, Choose Details on what’s been happening in retail banking lately and how to choose the best bank account for your personal and financial needs.

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Store closures hurt consumers and communities

One of the fundamental decisions of Personal Finance chooses where your money lives, and that’s usually in a bank. The vast majority of Americans – approximately 95% – have set up bank accounts. According to 2019 FDIC data, about 5% of Americans remain “unbanked,” meaning they don’t have a traditional checking or savings account. And as banks continue to close across the country, it’s making banking even harder.

First of all, the trend towards bank closures is nothing new. In 2000 there were 8,000 commercial banks in the United States FDIC data. By 2021, just over half of them were still standing, 4,236, and that number will continue to fall even into 2022 – it now stands at 4,194 as of March 31. The closures aren’t limited to small banks in rural communities either, as they’re also happening to large legacy banks in densely populated areas.

According to a report by S&P Global Market IntelligenceWells Fargo led the field with 267 bank branch closures in 2021, followed by US Bank and Truist with 257 and 234 branch closures, respectively. The five hardest-hit states were California, with 269 store closures; Michigan with 247 stores; New York with 221 stores; Florida with 192 stores; and Illinois with 153 stores.

While this trend is widespread, it hits low-income and majority-minority communities even harder. According to that National Community Reinvestment CoalitionA third of the branches closed from 2017 to 2021 were in areas that were predominantly low-income and predominantly dominated by minorities.

The impact of the sudden disappearance of banks from communities isn’t superficial either – affected residents now have to travel farther to make a simple deposit or withdraw cash, for example, which takes more time.

The merger of bank branches also createsbank deserts,” when communities do not have access to a bank or credit union within 10 miles. Multiple studies have shown that these communities are more likely to use non-traditional and fee-based borrowing options such as payday loans and check cashing services, increasing financial inequities and ultimately widening the wealth gap.

While there may be fewer physical bank locations, there are still some consumer options regardless of what may or may not be available to you locally.

How to choose a bank

If you are When deciding on a new bank or credit union, there are several things to consider that will help you decide which one is best for your financial situation:

Evaluate account features and fees

First and foremost, if your bank is charging you monthly fees, find out why. With a wide range of fee-free bank accounts to choose from, you really shouldn’t be paying for a checking or savings account.

You might also want to look through the other account features to see what else you might find useful. For example, another bank may offer perks like free loan monitoring or a higher interest rate than your current bank. Or, if you want better online tools, switching to a digitally savvy bank could be beneficial.

If you are looking for a new bank, ask yourself this question: what features do I really need?

The answer could be anything from fee-free ATM withdrawals, no overdraft fees or online bill payment, to a well-designed website and mobile app, and 24/7 customer support. Which benefits meet your needs should be the focus of your next bank account.

Banking digital vs. personal

Whether you live in a big city or a rural community, it’s hard to deny the convenience of an online-only bank. Corresponding US Direct Banking Satisfaction Study 2022 by JD Powera quarter or about 27% of Americans currently use an online-only bank.

The study also suggests that online banks perform best in terms of customer satisfaction Karl Schwab and Discover Bank in first place and Ally Bank in third for checking accounts. Savings accounts had similar results, with American Express, discover bench and Charles Schwab leads the pack.

If you tend to pay for your expenses with cards rather than cash, going digital could be a more efficient decision.

American Express® High Yield Savings Account

American Express National Bank is a member of the FDIC.

  • Annual Percentage Return (APY)

  • minimum balance

    The minimum balance to open is $0

  • monthly fee

  • Maximum Transactions

    Up to 9 free withdrawals or transfers per billing cycle *The 6/extraction cycle withdrawal limit is being waived during the Coronavirus outbreak under Regulation D

  • Excessive transaction fee

  • overdraft fees

  • Offer checking account?

  • Offer ATM card?

American Express National Bank is a member of the FDIC.

Discover the online savings account

Discover Bank is a member of the FDIC.

  • Annual Percentage Return (APY)

  • minimum balance

  • monthly fee

  • Maximum Transactions

    Up to 6 free withdrawals or transfers per billing cycle *The 6/extraction cycle withdrawal limit is being waived during the Coronavirus outbreak under Regulation D

  • Excessive transaction fee

    Discover may refuse to pay for any transaction in excess of the limits. Exceeding these limits more than occasionally may result in the closure of your account.

  • overdraft fees

  • Offer checking account?

  • Offer ATM card?

    Yes, if you have a Discover checking account

Take advantage of welcome bonuses

Just like rewards credit cards, banks sometimes offer welcome bonuses to attract new customers, typically in the form of cash incentives for holding a certain balance in your account or setting up a direct deposit with your employer.

Personally, I have made it a habit to switch banks to snag welcome bonuses and have made significant profits doing so. If you have some flexibility in choosing a bank, consider one of these active checking account bonuses:

  • Up to $400 to open and use a new one PNC Bank virtual wallet – that’s $50 for a new virtual wallet, $200 for a new virtual wallet with Performance Spend, or $400 for a new virtual wallet with Performance Select.
  • A $200 bonus for opening a Chase Total Checking® Account and set up a direct deposit within 90 days (offer valid until July 20, 2022).
  • A $100 bonus for opening a Chase College Checking Account℠ and completing 10 qualifying transactions within 60 days (Offer valid until July 20, 2022).

Additional offers are also available and change frequently, so check back often to see what’s available near you or online.

bottom line

With retail banking expanding at breakneck speed in recent years, it may be time to reconsider your banking relationship. Whether your local branch is now operating limited hours, has already closed its doors, or your financial needs have changed, switching banks can be a big financial move for you.

Check out Select’s in-depth coverage of personal finance, technology and tools, wellbeing and more, and keep following us Facebook, Instagram and Twitter to stay up to date.

Interest rate and APY are subject to change without notice at any time before and after opening an American Express® High Yield Savings Account.

Editorial note: Any opinion, analysis, review, or recommendation expressed in this article is solely that of Select’s editors and has not been reviewed, approved, or otherwise endorsed by any third party.


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