By: Daryl Tolliver
It appears that more Americans are fueling their checking accounts on a broader scale, indicating the more consumers are improving their financial health.
According to a new analysis conducted by Pitney Bowes Software, checking account balances have grown stronger in most U.S. states, while savings account balances vary largely on a state-to-state basis. This may be partially because many areas of the country have been disproportionately impacted by unemployment, rising food prices and natural disasters that have made it more challenging for individuals to get their finances back on track.
The report shows that checking account average balances for non-interest accounts increased 5.2 percent nationwide to $3,100 from $2,947 in 2010. The states that experienced the largest increases include Louisiana at 21 percent, New York at 19 percent, Iowa at 16 percent, Alaska at 14 percent and Hawaii at 13 percent. Six states, however, experienced declines in average non-interest checking account balances, most notably the distressed state of Florida, which saw 11 percent declines in these funds. Florida remains one of the hardest-hit states that is still struggling to overcome housing and unemployment woes.
Savings account balances fluctuate
While most states experienced higher checking balances, the same is not true for savings accounts. Residents of New Mexico carried an average of $4,119 in their savings accounts following a steep 9 percent decline since 2010. Average balances in Arizona also fell to $4,406, while those in Arkansas did not trail too far ahead at $4,697.
Some states appeared to recover well, however, with those in the Northeast typically maintaining healthier savings accounts. For example, New Jersey topped the list with residents carrying an average $7,872, while those in New York and Connecticut closely trailed with average amounts of $7,691 and $7,402, respectively.
More consumers adopted an attitude of frugality following the recession, and many are continuing to make changes to their lifestyles and spending habits to rebuild a strong financial platform. Credit unions and community banks may be in a unique position to boost their customer acquisition numbers by marketing their reward programs and free checking benefits more heavily. Most large banks have been forced to do away with these programs and have instead focused on fee income strategies. As consumers seek out ways to avoid paying higher fees for their accounts, they may be more willing to transfer to local institutions that offer free services and reward them for everyday spending.