Banking failures have kept Americans on edge over whether their money is safe, a recent survey said.
The recent collapses of tech-friendly banks Silicon Valley Bank (SVB) and Signature Bank were why 48% of Americans said they were stressed about the safety of their money in accounts at banks or other financial institutions, according to a Gallup survey. The poll was conducted before the failure of First Republic Bank.
The survey was last conducted in 2008, following the fall of Lehman Brothers– the largest bank failure in U.S. history – in the wake of the subprime mortgage crisis. At the time, 45% of U.S. adults said they were very or moderately worried about the safety of their money, according to the survey.
"After several recent high-profile bank failures in the U.S., about half of Americans are concerned about the safety of the money they have in banks or other financial institutions," Gallup said. "This is on par with the level of worry measured during the financial crisis in 2008 when financial institutions previously believed to be 'too big to fail' collapsed."
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Over half of Republicans respondents (55%) and 51% of Independents said they were at least moderately worried about the safety of their money, according to the survey. By comparison, 36% of Democrats expressed a similar concern over the safety of their money.
Broken down by educational level, 54% of respondents with no college degree said they were at least moderately concerned, while 36% of college graduates said they were. Half of Americans (50%) with an annual household income under $40,000 said they were worried about their money, while 40% of Americans earning over $100,000 said the same.
Most Americans, however, have money deposited in Federal Deposit Insurance Corporation (FDIC)-protected bank accounts. FDIC insures $250,000 per depositor, per insured bank, for each account ownership category, according to the Gallup survey.
FDIC is funded by premiums that banks and savings associations pay for deposit insurance coverage, according to the FDIC website.
Concern was higher among lower-income adults, those without a college degree and Republicans, which may be caused by a lack of awareness over how FDIC insurance works, according to Gallup.
"When banks fail, it is also unclear whether Americans' heightened concern about their own deposits reflects a lack of awareness of the protections for small accounts provided by federal deposit insurance or their fear of a snowball effect that could bring down federal insurance as well," the survey said.
"Worry among these groups may be higher because they do not know about FDIC insurance, or it may be linked to their displeasure with the current presidential administration and the U.S. economic situation," the survey continued.
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While faith in retail banking appears to be waning, consumers have been increasingly satisfied with online-only banks, according to a recent J.P. Power survey.
Customer approval of direct banks rose 14 points this year, driven by their satisfaction with deposit interest rates and the ease of managing accounts and transferring money using a mobile app, the survey said.
"Amid widespread volatility in the U.S. retail banking sector, direct banks—which offer branchless, digital alternatives to traditional retail banks—have been a bright spot that continues to drive exceptionally high levels of customer satisfaction," Paul McAdam, senior director of banking and payments intelligence at J.D. Power said in a statement. "With their attractive fee structures and focus on seamless digital customer experience, direct banks have been able to offer even more competitive interest rates than their brick-and-mortar counterparts while also making it incredibly easy for customers to move money and manage their accounts."
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