Bank Mergers Are Booming. Here’s Why Savers Should Watch Their Wallets

Tim Grist Photography/Getty Images; Illustration by Austin Courregé/Bankrate

Big bank mergers are starting to pick up steam in 2025, and history shows that’s not typically good news for savers. The recent wave of consolidation in the banking industry could spell trouble for your interest rates, account terms and overall financial choices.

As a reporter who has gained some keen insights on banking, covering finance for more than a decade, I’ve seen how consolidation typically impacts consumers. I’ll break down what’s happening now, why it matters for your savings and what steps you can take to protect your money.

The merger wave is gaining momentum

The mega-merger of Capital One and Discover that had been on ice under the administration of President Joe Biden was approved by U.S. bank regulators last month. Less than two weeks after the announcement, numerous small, midsize and large financial institutions had announced their own deals.

In April, nine U.S. bank deals totaling nearly $3 billion were announced, marking the highest monthly total by aggregate deal value since December 2021, according to S&P Global Market Intelligence data.

Data show that banks had already been gearing up for a changing regulatory environment. Through the end of February, 19 bank deals worth a combined $985.5 million were announced, an increase of 50 percent from the same period in 2024.

We’re seeing not just a steady pace of deals, but also a fundamental shift toward larger, more significant mergers.

Why does banking consolidation matter for everyday Americans?

If history is a guide, when banks come together it typically signals lower interest rates and reduced options for savers. A 2011 study of research on bank mergers from the Federal Reserve Bank of Cleveland found that deposit rates of merging banks “drop almost immediately after the merger.”

This makes sense. Bank consolidation typically results in fewer institutions competing for consumer deposits. When there’s less competition, banks have less incentive to offer higher interest rates or innovative products to attract and retain customers.

As banks merge, especially in local markets, consumers may find fewer choices and less aggressive rate offerings. Consulting firm Deloitte’s 2025 outlook on the banking sector predicted that the rates banks are paying customers for their deposits will fall from 2.64 percent in 2024 to 1.70 percent by 2026.

Larger, consolidated banks often have more pricing power and brand strength, allowing them to offer lower deposit rates than smaller competitors, the study notes.

Deloitte expects some large banks to reduce deposit rates, relying on their strong balance sheets and established customer bases to remain competitive.

In contrast, smaller and regional banks, which are often acquired in consolidation waves, tend to offer higher rates to attract deposits. As these banks disappear, so do their competitive rates.

Banks are also increasingly focusing on raising their noninterest income, which is the revenue they earn from services and fees, like charges for checking accounts, ATM usage, overdrafts, credit card fees and wealth management services.

Steps to protect your savings

Don’t wait to see if a merger will lower your rate – shop around now. Online banks and credit unions often offer more competitive rates than traditional banks, even as rates fall.

• 1. Explore online banks and credit unions
  

  Online banks and credit unions often offer more competitive rates than traditional banks, even as rates fall. Without the overhead costs of maintaining physical branches, these banks can pass more value to customers through higher yields.

  Compare Bankrate’s best high-yield savings accounts.

• 2. Consider a CD ladder strategy
  

  Consider locking in higher rates for longer periods by building a CD ladder, giving you some protection if rates drop further. A CD ladder involves dividing your savings into CDs with staggered maturity dates, providing both higher yields and periodic access to your funds.

• 3. Look into Treasury securities
  

  Consider investing in short-term U.S. government bonds as an alternative – you can buy Treasury bills with terms ranging from 4 weeks to 1 year. These government-backed securities often offer competitive yields with minimal risk.

• 4. Maintain emergency liquidity
  

  Make sure to always keep enough cash on hand for emergencies and short-term needs, but be proactive about moving extra savings if your bank’s rates start to slide.

• 5. Stay informed and negotiate
  

  Monitor your accounts and be ready to switch if you notice negative changes. You can also reach out to your bank to find out what your current rate is and whether they have better rates available.

  The best defense against shrinking returns is staying alert, comparing your options and making moves before your money loses earning power.

What to do if your bank has already announced a merger

If your bank has already joined in on the M&A party, don’t panic – bank mergers are common and typically take months to finalize. However, they often bring changes to account terms, fees, branch locations and customer service.

1. Start by reading all communications from your bank carefully. Make sure you understand any changes to your account, especially regarding interest rates, minimum balances or new fees.
2. If you’re unsure how your accounts or rates might change, call your bank or visit a branch and ask direct questions about what to expect. Don’t be afraid to request a written summary of any changes and keep records of all communications.
3. Review your current account terms and compare them to what competitors are offering. Be proactive: Shop around for high-yield savings accounts, lower fees or special promotions that other banks may offer to attract new customers.
4. During the merger process, monitor your accounts closely for errors or unexpected changes. Transitions can sometimes result in technical glitches, missed payments or new fees.
5. If you notice increased fees, reduced service or a drop in your interest rate, don’t hesitate to switch banks, or to let your bank know that you’re thinking about doing so. Check out Bankrate’s guide to switching banks to learn more.

The bottom line

Bank mergers can be bad for customers, especially when it comes to savings rates, features and account terms.

This latest wave of banking consolidation is likely to accelerate, which could put downward pressure on the interest you earn on your deposits.

By staying informed, shopping around and being proactive, you can maximize your money and make sure it’s working as hard as possible. Don’t wait for your bank to make the first move – take control of your financial future today.