rewrite this title Survey: Banking Misconceptions are Commonplace – NerdWallet

Banking misconceptions abound, according to a new NerdWallet survey. The survey of more than 2,000 U.S. adults, conducted online by The Harris Poll, found that some Americans believe common myths about bank security, interest rates and fees, and where money should be saved for financial goals. But understanding the basics of where you keep your money can keep these myths from costing you.

According to the survey, more than a third of Americans (36%) mistakenly believe online-only bank accounts are less secure than brick-and-mortar bank accounts. This misconception is more likely to be held by younger Americans — 50% of Gen Zers (ages 18-28) and 43% of millennials (ages 29-44) believe this myth, compared to just 27% of Gen Xers (ages 45-60) and 28% of baby boomers (ages 61-79).

FDIC-insured online banks are required to take proper security measures, designed to make them as safe as brick-and-mortar banks. That said, it’s still important to take precautions on your side, just as you would with any other online activity. This includes enabling multifactor authentication, not logging into accounts on public Wi-Fi and using a password manager to create and store strong, unique passwords.

More than 2 in 5 Americans (43%) think money for savings goals more than one year away should be invested in the stock market, according to the survey. Average annual stock market returns are higher than average savings account interest rates; this is true. But the market is not always up. And if the savings goal isn’t time-flexible, you could lose money during that period, instead of seeing growth.

Instead, mid-term savings goals — such as a dream vacation or a down payment for a home purchase in the next five years — should be saved in a high-yield savings account, money market account or a certificate of deposit (CD). (Keep in mind that CDs require you to leave money in them for a specified period of time, usually at least three months, and generally don’t allow ongoing deposits.) The returns may be lower than a stock market “win,” but these are safer bets in the short term.

The survey found that more than three-quarters of Americans (78%) believe bank interest rates rise and fall when debt product interest rates rise and fall. While not completely false, this also isn’t necessarily true. It’s a murky myth, if you will.

The target federal funds rate — set by the Federal Open Market Committee — is the interest rate banks pay each other to borrow or loan money overnight. Those higher or lower costs can be passed onto consumers, making debt more or less expensive and accrued interest higher or lower. In other words, if the Fed rate goes up, it could mean a higher interest rate on savings accounts, but also higher interest rates on credit cards.

But here’s where it gets murky: All interest rates on financial products don’t move at the same time or proportion following a Fed rate announcement. While your bank may cut their savings account rate pretty quickly if the federal funds rate drops, mortgage rates could stay steady or even increase in the short term — there are other additional factors at play in these rates. So while technically, yes, a drop in the Fed rate could mean decreased interest rates across financial products, the timing and magnitude varies.

Nearly 3 in 10 Americans (29%) don’t think it’s possible to avoid incurring fees when you have a bank account, according to the survey. But fees aren’t inevitable; most fees can be avoided by choosing the right bank and knowing the rules.

Some common bank fees are monthly maintenance, overdraft and ATM fees. Each of these can be avoided, either by finding a bank that doesn’t charge them or taking the steps required to dodge them.

Though the details may vary bank to bank, monthly maintenance fees can generally be avoided by maintaining a required minimum balance in the account or setting up direct deposit. If these requirements aren’t possible for you, many online banks don’t charge these fees at all.

Overdraft fees, which may be charged if you spend more than what’s available in the account, can be avoided in a few different ways. You can choose to opt out of overdraft protection — this means a transaction would be declined if there aren’t enough funds — or connect your checking and savings accounts so if you charge more than what’s available in checking, your savings account can cover the difference. Another option is setting up bank balance alerts so you’re notified if your balance drops below a certain amount.

ATM fees can be avoided by using ATMs that belong to your bank or are otherwise in-network. (Your bank’s app or website likely has a tool to find in-network ATMs local to you.) Check your bank’s fee policies; some banks also reimburse fees charged by out-of-network ATMs.

This survey was conducted online within the United States by The Harris Poll on behalf of NerdWallet from March 4-6, 2025, among 2,046 adults ages 18 and older. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/- 2.5 percentage points using a 95% confidence level. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact [email protected].

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