Six Reasons for Switching Banks

There are many ways you can improve your financial situations. While many financial solutions involve creating new budgets, there are some solutions that require minimal effort, like switching to a new bank.

It may not initially seem like it but switching your bank may have a large impact on your finances. Every bank has different fees and service charges. It is possible you are using a bank with higher fees than another, so simply switching to a new bank already saves you money.

Changing banks is not always about financial benefits. In some situations, you want to change from your bank due to the customer service. If you are not happy with your bank, there is no reason to limit yourself to staying with them when there are so many other banks to consider. Some banks also provide special membership bonuses or offer better loans to members, which is another reason to switch. Switching banks does not always lead to better benefits, so make sure you take the time to understand what you currently have, and what you are getting from a new bank. Keep in mind, jumping from one bank to another may also cause you to lose as many benefits as you gain. To get a better idea on whether to switch banks, consider the six most common reasons to change banks.

What are the six reasons for switching your bank?

One of the first areas you want to check if you are considering banks is how much your bank charges you. Some common charges to check for are overdraft fees, fees for using an ATM outside of your bank and applying money from your bank account into another source, such as PayPal. These fees may seem small at first, but if there are numerous fees or the fees are for a common service, the charges quickly add up.

Study the direct fees you pay and work out how much they are costing you each year. Also, some banks charge hidden fees. These are charges the bank does not inform you about, such as additional fees for particular activities, such as placing a small charge on credit card payments or taking money from your account for a monthly service charge.

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If you are getting frequently more agitated with your bank because of poor customer service, why not change banks? It may seem like a hassle to change banks solely because of poor customer service, but you deserve to leave your money with a bank where you are treated with respect. If your bank has poor customer service, it is harder to trust them with something as important as your money, and you may end up receiving limited help in an emergency situation, such as someone making fraudulent charges using your account. Poor customer service can include behavior like:

  • Being stuck in a line for hours when you go to the bank.
  • Waiting for ages to get through to an actual person when you telephone the bank.
  • A lack of help from the staff at the bank.
  • Experiencing unfriendliness from the staff.

Changes in your life situation may cause you to switch banks too. If you move to a different town, you may find your local branch is further away than it used to be. Perhaps you have started a new career where you have to travel, in which case, you want to be with a bank with a widespread network of branches. Another common change of life situation is getting married. Many wedded couples like to close personal accounts and open a new joint account.

Different banks have different interest rates. If you find you could get a better interest rate with another bank, why not switch banks? Even if the higher interest rate of another bank is minimal compared to your current bank, you may find it adds up quite significantly over a year or two. Generally, you can find higher interest rates from online-only banks. Shop around to see which bank has the best interest rates available.

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Although online banking is common these days, some banks are behind the times and do not offer all the digital services compared to other banks. These services include:

  • Apps
  • Customer service via social media
  • Chat options
  • Security features

If online banking is important for you and your current bank is not up to speed, it could be time to switch your bank.

If you have banking goals to fit in with your career and lifestyle, your bank needs to be able to keep up with your personal requirements. For example, if you run a small business your banking needs are typically different than your requirements for a personal bank account. Some banks provide specific perks to small business owners, such as helping you with any business-related loans.

How do you switch banks?

Once you have decided it is time to change banks and you find a new one, it is fairly straightforward to switch your account. Your new bank and your old bank can give you information on what exactly you need to do. The specific steps may vary slightly depending on the bank. For the main part, once you have opened a new account, you simply need to take these three steps:

  • Set up your regular automatic transactions for your new account.
  • Transfer the money from your old account to the new one.
  • Close your old account.

When Switching Banks is not a Good Idea

There are cons as well as pros when it comes to switching banks. If your bank account is overly complex, the process of switching can be more difficult than the three simple steps given above. Switching banks may also involve the process of changing your mortgage loan, your debt and so on, which can include complicated paperwork. Perhaps the greatest reason for staying with your current bank is if you have held the same bank account for years, it helps you with your creditworthiness. By switching banks, you may lose your leverage and find it harder to obtain loans.

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