When you’re a hammer, everything looks like a nail, as they say. On the surface that might have been the case in a new study released by Plinqit, a young fintech specializing in saving tools banks can offer customers. The survey, however, is quite legitimate and suggests that just over half of Americans, 54 percent, who do not currently use high-yield savings (HYS) accounts said they are likely to open one in the future.
The company’s “2024 State of Savings Report” also showed that Americans with higher household incomes are more likely to open a high-yield savings account. Of those with an income of $50,000 or more, 58 percent, say they are likely to open a HYS account, compared to 46 percent of Americans making less than $50,000.
The top factor, cited by more than two in five Americans (41 percent), used to decide where to save their hard-earned cash, is the ROI an account can generate for them. The second most-cited factor, at 37 percent, was interest rates offered by the financial institution.
Plinqit has an obvious incentive to proclaim bank customers are interested in specialty savings products, but this professional survey was conducted online within the United States by The Harris Poll on behalf of Plinqit from June 4-6, 2024 and counted 2,084 U.S. adults ages 18 and older. According to Harris, its polls are measured by using a “Bayesian credible interval.” For this study, the sample data is accurate to within +/- 2.5 percentage points using a 95 percent confidence level. Community banks thinking about new ways to entice savers might take notice. The study says that generationally, millennials are most likely to enroll in a high-yield savings account with 22 percent reporting they plan to do so. Gen Z is a close second, with 13 percent reporting they are very likely to open an account, while baby boomers show the lowest propensity to open a high-yield savings account at 7 percent.
One takeaway is that younger generations of Americans are looking for ways to pay down debt while also saving. “Nearly all Americans are stashing money away somewhere. While only one in five do so in a high-yield savings account, the interest in opening high-yield savings accounts is growing, and younger Americans are leading the way,” said Kathleen Craig, founder and CEO of Plinqit. “This is excellent news for banks. Our own clients support these statistics. We see that 42 percent of HYS end users have a household income of $100,000 to $249,999. With an average balance of more than $40,000, these are the customers whom banks are proactively seeking, and high-yield accounts are a simple but effective tool in the toolbox.”
Meeting customers where they are is key to any product’s success. As younger Americans age into higher income brackets, they can be found on their phones. The Plinqit survey also makes the case for banks to seek out younger customers who have a jumble of financial goals that often include paying down education debt, saving and, well, just basically trying to live a fun life.
The survey says 44 percent of Gen Z are saving for travel this year, which supersedes debt repayment. “Financial institutions have an opportunity to help this generation pursue their dreams while maintaining financial wellness,” Craig said. “Offering tailored financial products delivered via a bank’s app, like travel-specific savings accounts or goal-based saving features, can motivate young adults to stay consistent with their savings while still making room for debt repayment.”
Digital savings tools developed by Plinqit and others can also promote flexible savings plans that accommodate both short-term and long-term goals. This could mean creating customized savings plans based on an individual’s income, debt levels, and financial goals, such as saving for a down payment on a house (the survey says 32 percent of Gen Z are already working toward this) or a major life event such as a wedding.
“Managing the competing financial goals of debt repayment and saving is a tough challenge, but it’s not impossible,” Craig said. “By leveraging high-yield savings accounts, financial education, and personalized support from financial institutions, Gen Z can strike the right balance to maintain their financial wellness.”
For bankers unfamiliar with these new tools, they operate almost like a video game where money is the points. Not only do they make saving decisions visual, they are made with the swipe of a finger or a tap. Although not included in this survey, commercial customers are also being catered to with tools that allow them to move cash around easily, from a payables account to a money market fund so idle cash gets put to work. It’s a good time to be a saver.