Money is the most desired tool in society. It’s a medium of exchange that not only conveniently allows for the transaction of goods and services, but also enables us to accomplish our life goals. We work hard for our money, so it’s only natural that we want to protect it and give it proper storage. However, this is easier said than done depending on where you live.
More than 6,500 FDIC-insured banking institutions are open for business in America. While the most recognized banks are national heavyweights that are recognized by almost everybody and their grandmas, the majority are smaller regional or local banks. In order to discover the banking landscape in each state, MoneyRates.com analyzed bank quality and security across the country, based on the criteria listed below.
- Availability of choice: This was based on the number of banks based in each state.
- Stability: This was determined by the percentage of a state’s banks which failed during 2014.
- Customer satisfaction: MoneyRates calculated the average scores from the most recent JD Power Retail Banking survey for the banks with locations in the state.
- Competitiveness of interest rates: The MoneyRates America’s Best Rates study identified a few banks that are bucking the low interest rate trend. MoneyRates then ranked the states based on how many leading banks from that study have locations there.
Considering how little service some banks offer, it’s no wonder why more people are moving their money to credit unions and online-only banks. Let’s take a closer look at the 10 worst states in America to trust banks with your money.
Nevada ranks as the No. 10 worst state in America to trust banks with your money, and not because of the roulette tables. With the recent housing meltdown, Nevada is no stranger to a financial crisis. The state ranks in the bottom for both number of banking choices and overall customer satisfaction. In fact, Nevada only has 45 banks based in state, the third lowest on this list. Only one bank managed to crack The MoneyRates America’s Best Rates study. On one positive note, Nevada had zero bank failures over the past year.
Delaware ranks as the No. 9 worst state for banking. It has only 41 banks based in state, which is understandable given Delaware is the nation’s second smallest state. However, it does not convey a hometown feel for customers. Delaware has the second-worst score of any state for overall customer satisfaction. Only South Dakota has a worse score. Customers may find some comfort that zero banks in Delaware have failed over the past year, and three banks are known for attractive interest rates.
8. North Dakota
North Dakota ranks as the No. 8 worst state for banking. Despite having 95 banks based in state, nearly a dozen more than its southern neighbor, North Dakota is in the bottom half of the country in terms of the number of bank choices. Customer satisfaction is also low, and residents shouldn’t expect to find the most attractive rates from their local institutions.
Montana ranks as the No. 7 worst state for banking. Montana escaped the bottom 10 in last year’s rankings, but slipped in 2015 with poor customer satisfaction, a limited number number of banks based in state (71), and zero banks on the The MoneyRates America’s Best Rates study. Nonetheless, zero banks failed in the past year and Montana offers more choices than Idaho’s 34 banks based in state.
6. South Carolina
South Carolina ranks as the No. 6 worst state for banking. Although the state was previously ranked a little above average, it suffered one of 2014’s relatively few bank failures. Combined with a low number of banking options, South Carolina had 1.10% of its banks fail in 2014, the third highest in the nation behind Idaho and Maryland. In April 2014, five branches of Allendale County Bank of Fairfax were seized and sold to Palmetto State Bank. It was South Carolina’s first bank failure in about two years.
Minnesota ranks as the No. 5 worst state for banking, down two spots from the prior year. The state has the third-most banks of any state in the country, at 399, but this appears to be a case of quantity over quality. Minnesota banks are well below average for customer satisfaction, zero banks made the best rates study, and 0.25% of the banks failed in 2014.
Maryland ranks as the No. 4 worst state for banking. It managed to miss the bottom ten in the prior year, but two bank failures in 2014 give Maryland the second-worst failure rate in the nation (1.72%). Also, the average customer satisfaction rating of banks serving the state fell from one of the best in the nation to the middle of the pack. Maryland has a respectable 116 banks based in state.
3. New Mexico
New Mexico ranks as the No. 3 worst state for banking. Not only does New Mexico offer only 63 banks based in state, but this small handful of banks receive some of the lowest customer satisfaction scores in the nation. On the positive, zero banks have failed over the past year.
Alaska ranks as the No. 2 worst state for banking, as your cold hard cash doesn’t receive a warm welcome. The Last Frontier has the fewest number of banking choices, at only 7, and one of the worst customer satisfaction scores in the nation. Unsurprisingly, zero banks made the best rates study. Alaska didn’t suffer any bank failures over the past year, but that’s not saying much considering the number of banks. Residents should seek out better service and rates online.
Idaho ranks as the No. 1 worst state for banking, down from the No. 8 worst state a year earlier. The state only has 34 banks based within its borders. Making matters worse, Idaho had a bank fail in 2014 so its failure rate reached 2.94%, the highest in the nation. Aside from the limited number of choices and failure rate, Idaho ranks above average on customer satisfaction and competitiveness of interest rates. However, that was not enough to boost its ranking.
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