How to Tell When It Is Time to Switch BanksApril 06, 2017
Most of us stay with the same bank year after year. This is usually out of simple convenience and not out of a deep sense of loyalty to our financial institution. After all, it can be a hassle to switch direct deposits and automatic debits. There are, however, a few situations in which breaking up with your bank makes sense and is worth the temporary inconvenience.
The Fees Are Becoming Burdensome:
A number of the big, nationwide banks are introducing new fees or increasing existing ones. Everything from monthly account maintenance fees, online banking fees, and transaction fees are becoming more common. Switching to a smaller community bank may help you keep more of your own money since they typically charge fewer fees than nationwide institutions.
Your Lifestyle Has Changed:
Your bank’s hours, services, and locations should be convenient for the way that you live your life. The local bank next to your office may have worked perfectly for you at one time; however, it may no longer be ideal if you spend the majority of your time on the road. A bank with a national presence may make it easier to access funds when and where you need them. If you routinely work long hours, you should consider a bank with extended hours and robust online self-service options.
Your Relationship Status Has Changed:
If you and your new spouse have accounts at different financial institutions, it is a good idea to consider transferring them to the same bank. This simplifies the money management process and makes it easier to move funds between accounts when necessary. You should take the time to carefully review the fees, services, and convenience of each bank to determine if either is the best option.
Your Bank Is Behind on Technology:
Account notifications, instant balance and transaction information, and online and mobile banking options can allow you to make better financial decisions and eliminate the need for in-person visits to the bank. When considering a new bank, be sure to ask for an overview and demonstration of their technology-based banking options as well as the steps the bank takes to protect your information.
You Are Not Getting the Most Out of Your Money:
Whenever possible, you want your money to work for you. Compare your bank’s interest rates with the competition’s to see if they are competitive. Online-only banks typically offer higher rates and may even offer additional perks, including interest-bearing checking accounts or cash back on debit card purchases. Of course, you will have to sacrifice the convenience of having a local brick-and-mortar branch.
You Notice a Decline in Customer Service:
If you feel like it is impossible to get your bank to handle even a simple request quickly and accurately, it is time to consider a switch. Even if you have a modest account in a large financial institution, you should feel like the bank values you as a customer just as much as a wealthy private banking client.
Steps to Closing Your Old Bank Account:
Once you find the right bank, you need to carefully plan the transfer process to minimize the possibility of any hiccups along the way. This starts with making a small deposit into the new account and making a couple of small transactions to ensure that everything works properly. You should do this a couple of weeks before you plan to close your old account. It is also important to make sure that you have received your debit card and that all online and mobile access is up and running.
The next step is to electronically link the old and new accounts so that you can easily move funds between the accounts until the entire switch is completed. The electronic banking department at your new bank should be able to walk you through this. Be sure to ask both banks about any fees that may be associated with these electronic transfers.
Next, transfer all of your income by changing any direct deposits. Finally, you need to update your account with any automatic or online bill payments. Be careful not to overlook companies that may only bill you quarterly, semi-annually, or annually.
It is important to remember that it can take a couple of pay periods or billing cycles for automatic deposits and payments to switch to the new account. You should keep the old account open with enough of a balance to cover upcoming drafts until you see that everything has changed over to your new bank successfully.
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