Michael Moebs, Moebs $ervices
LAKE FOREST, Ill.—Consumers continue to hold a significant amount of money in their checking accounts, a new study indicates—but one indicator suggests consumers may also be getting ready to move funds.
Moebs $ervices reports that for the second quarter of 2015, the average balance in checking was $5,381.
“While balances are down 1.5% from the first quarter of 2015, they are still 2.7 times greater than the normal average from 1994 to 2008,” said Michael Moebs, economist and CEO at Moebs $ervices. “Since the recession of 2008, most consumers have nowhere to earn a decent interest rate and the stock market scares them. Consumers are not paying down credit cards with the average outstanding credit card balance per household remaining steady at approximately $8,700 for the past five years. Keeping cash close at hand in checking is reflective of the economic future.”
Moebs Services’ Checking Study found a correlation between high checking account balances and consumers’ uncertainty about the economy.
Totals Reach Historic High
As of June 30, 2015, funds in checking accounts totaled a historic high of $1.7 trillion, made up of 38% consumer accounts.
“Before the recession in 2008, during a period of less economic volatility, the checking balances were $604.8 billion. In eight years the spotlight is a 184% change, which could be reversed with an improved economy, and even more so if the consumer starts spending or moving the excess checking balances,” said Moebs.
Consumers filed 410,000 complaints with the CFPB from December 2011 thru June 2015, Moebs noted.
“Complaints regarding checking accounts were roughly 35,000 or about 8.5% of all complaints. These complaints revealed the consumer does not understand the checking account because financial institutions do not properly educate them on checking practices,” said Moebs. “The CFPB has continued to focus on overdrafts, which represents only 1.6% of all complaints. When it comes to deposits, the consumer wants greater clarity and better rates.”
As for the 1.5% drop in checking balances to an average of $5,381, Moebs added, “This is the first fall in seven years but it is slight and represents only one quarter. What it does signal is the consumer could be poised for a movement. The questions for financial institutions are: which funds could move, how much money could move and will it stay in the financial institution or go someplace else? These are questions banks, thrifts and credit unions need to answer as they prepare plans and make budgets for success in 2016.”
