SwitchWize Research Desk
The Sleepy Depositor Premium: What Bank Inattention Is Worth
A 2025 NBER paper finds banks earn a 36 basis-point annual markup purely from depositor inattention. Applied to live Fed data on U.S. household deposits, that wedge is worth roughly $33 billion a year, a conservative floor since it excludes checking balances.
Last reviewed September 2, 2026 · SwitchWize Research Desk
Sleepy Depositor wedge
36 bps/yr
68 bps actual vs 32 bps counterfactual
Estimated annual cost
$33B
conservative floor, U.S. household deposits
Share of bank profit from inattention
58%
of deposit franchise value, per the paper
What this is, and what it is not
Egan, Hortacsu, Kaplan, Sunderam & Yao, “Dynamic Competition for Sleepy Deposits” (NBER Working Paper 34267, 2025), studies account-level open and close data across 900+ banks. They find fewer than 15% of active checking or savings accounts were opened in a given year, and only 17% of closures cite switching for better terms elsewhere. That inattention lets the average bank charge a 68 basis-point markup instead of a 32 basis-point one, and accounts for about 58% of the average bank deposit franchise value.
The dollar figure below is a SwitchWize derivation of that finding, not a number the paper itself publishes. It applies the wedge to a live Federal Reserve deposits series, not to a projection or a survey.
How the number is built
Every line below is either a fixed figure from the paper or a live Federal Reserve data point, multiplied together to produce the final estimate.
| Line item | Value |
|---|---|
| Average bank markup, with inattentive depositors | 68 bps/yr |
| Average bank markup, if all depositors were attentive (counterfactual) | 32 bps/yr |
| Sleepy Depositor wedge | 36 bps/yr |
| U.S. household time-and-savings deposits (FRED TSDABSHNO) | $9157B, as of 2026-01-01 |
| Sleepy Depositor Premium (wedge x deposits) | $33B/yr |
Methodology
Egan et al. (2025) estimate that the average U.S. bank charges a 68 basis-point annual markup on deposits, driven by depositor inattention -- fewer than 15% of active accounts were opened in a given year, and only 17% of account closures cite switching for better terms. Absent that inattention, the paper estimates the markup would fall to about 32 basis points, a 36-basis-point wedge the paper attributes 58% of bank deposit franchise value to. Applying that wedge to the live FRED TSDABSHNO figure for U.S. household and nonprofit time-and-savings deposits ($9157 billion, as of 2026-01-01) yields approximately $33 billion a year.
This dollar figure is a SwitchWize derivation, not a number published by Egan et al. -- the paper reports basis points and a share of franchise value, not a household dollar total. It is also a conservative floor: TSDABSHNO covers only time and savings deposits, not transactional checking balances, so the deposit base the paper actually studies implies a larger true figure. This is a distinct measure from the SwitchWize Bank Gap Index, which tracks the live spread between the national-average and best-available savings rate -- this figure instead reflects an estimate of what depositor inattention alone is worth to banks, independent of where rates currently sit.
Sources
- Egan, Hortacsu, Kaplan, Sunderam & Yao, "Dynamic Competition for Sleepy Deposits" (NBER Working Paper 34267, 2025)
- NBER Digest summary, "Bank Competition and Inattentive Depositors" (Jan. 2026)
- Federal Reserve, Households and Nonprofit Organizations; Total Time and Savings Deposits (FRED TSDABSHNO)
- SwitchWize Bank Gap Index (a related but distinct live-rate-spread measure)
How this differs from the Bank Gap Index
The Bank Gap Index tracks the live spread between the national-average savings rate and the best available rate -- it moves whenever rates move. The Sleepy Depositor Premium is a different, complementary number: a peer-reviewed estimate of what depositor inattention alone is worth to banks, largely independent of where rates currently sit. Together they answer two different questions -- “how much am I giving up right now” and “how much does not paying attention cost, structurally” -- with the same underlying framing this site calls the Inertia Tax.
How to cite this
SwitchWize, "The Sleepy Depositor Premium." Retrieved from https://www.switchwize.com/research/sleepy-depositor-premium.
View the raw dataset (JSON) ->Educational information, not personalized financial advice. Rates are illustrative of current market conditions and should be confirmed with the provider.