The banking industry has stabilized considerably since the darkest days of the financial crisis, at least in terms of the pace of bank closures.
Still, between branch closings and low bank rates this is hardly a golden era for banking, and some areas have it worse than others.
To uncover the banking landscape in each state, MoneyRates looked at four criteria:
- 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.
Based on that, here is 2015's list of the 10 worst states for banking:
- Idaho. After finishing eighth-worst last year, Idaho fell to the rank of the absolute worst state for banking in 2015. What is so bad about the banking industry in Idaho? Bank failures slowed to a trickle nationally in 2014, but Idaho had one of its banks fail despite having one of the smallest populations of banks (34) in the nation. This gave Idaho a failure rate of 2.94 percent, the worst in the country. Otherwise, Idaho ranked above average on customer satisfaction and competitiveness of interest rates, but that was not enough to overcome the limited number of choices and that failure rate.
- Alaska. Consumers suffer from the fact that Alaska has the fewest number of banking choices (7) of any state. That lack of competition may explain why no banks with locations in Alaska made the MoneyRates list of America's Best Rates, and why the average JD Power customer satisfaction rating for banks serving the state ranked 10th worst nationally. Those factors were enough to cause Alaska to slip from 5th worst to 2nd worst, despite having none of its banks fail last year.
- New Mexico. After narrowly avoiding the bottom ten last year, New Mexico had no such luck this year. New Mexico was among the lowest states in average customer satisfaction score, which is unfortunate because it is also among the states with the fewest banking choices. Also, none of the banks which made the most recent America's Best Rates lists have locations there.
- Maryland. Though it just missed making the top ten last year, Maryland fell all the way to the bottom ten this year. Why? Primarily because it was home to two bank failures in 2014, giving it the second worst failure rate in the nation. 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.
- Minnesota. This state fell a couple notches over the past year, from seventh-worst to fifth-worst. Minnesota has the third-most banks of any state, at 399, but apparently all those choices include too few good ones. Banks serving Minnesota were well below average in overall customer satisfaction rating, and none of the banks on the America's Best Rates lists have a presence in Minnesota.
- South Carolina. Though it was a little above average overall last year, South Carolina was done in this year by having one of 2014's relatively few bank failures. Having this occur within South Carolina's relatively small banking population gave it one of the higher percentage failure rates.
- Montana. A decline in satisfaction score dropped Montana into the bottom ten this year. The state offers relatively few banking choices, and none of the America's Best Rates banks maintains a location there.
- North Dakota. The overall customer satisfaction score for this state is in the bottom ten nationally. North Dakota is also in the bottom half in terms of the number of choices, and does not have any branches of banks that made the most recent America's Best Rates lists.
- Delaware. On top of ranking in the bottom ten for the number of banking choices - which may be understandable give the state's small size - what really did Delaware in was having the second-worst score of any state for overall customer satisfaction.
- Nevada. As one of the epicenters of the financial crisis, Nevada is fortunate that its banking community has stabilized, with no failures over the past year. However, having done that the state's banking community needs to grow and improve. The state ranks in the bottom ten for both number of choices and overall customer satisfaction.
Just because you live in one of the worst states for banking does not mean you have to sit back and accept poor products and services when it comes to mortgages rates, savings accounts or to refinance your mortgage.
Every state offers multiple choices of banks, and online banks are increasingly making new options available in virtually all areas. So, wherever you live, if you are not satisfied with your bank, start looking for one that can do better.