Americans finally moving cash to online banks

WASHINGTON: With short-term interest rates rising broadly across the economy the past few years, a small but growing share of customers are moving their cash to online banks that pay higher yields on savings and money market accounts. In the past 24 months, 21% of Americans have transferred their money to an online bank that pays at least 2% interest, according to a NerdWallet online survey of 2,012 adults for USA TODAY earlier this month.

Before that, only 6% of Americans had their savings account at an online-only bank, such as Ally, E-Trade or Discover. "If you work hard to save any money, you want to make sure it's there when you need it and that it has the same buying power," says Greg McBride, chief financial analyst of Bankrate.com. A 2% savings rate simply lets consumers keep up with annual inflation that has been running around 2%.

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Many savings-account transfers seem to have taken place recently. Fourteen percent of consumers polled by Bankrate April 30-May 5 were earning more than 2% on their bank savings, up from 6.3% in July. The share differs from the NerdWallet survey in part because the latter tracked people earning at least 2%. Not all of the increase was the result of transfers. The portion of Americans earning 1.5% to 2% has dropped from 11.5% to 7% since July, indicating that interest rates automatically rose to above 2% for some savers in that category.