Knowing When To Switch Banks
Take the time to understand when it might be wise to switch banks.
Many of us rely on banks and other financial institutions for several needs, ranging from the routine (cashing pay checks) to the uncommon (getting a form notarized). No matter what you rely on your bank to complete, it's nonetheless important that you're banking with the right institution. Still, switching banks can be a hassle, one that many people simply choose to put off and forget about.
Take the time to understand when it might be wise to switch banks. Or if you know you'll be signing up for a new account somewhere soon, pay attention to the details and choose a bank that makes the most sense for your financial needs.
When to make a change
At the end of the day, there are thousands of banks out there that meet the needs of most people. Assuming you aren't moving or in need of more specialized financial services, banks differentiate themselves in a few key ways:
- Savings rates: Most standard savings accounts and even some checking accounts earn interest over time. The rate at which they grow in value can vary considerably from one bank to another. The Balance suggested comparing interest rates using a compound interest calculator to determine exactly how much your account balances might be worth elsewhere.
- Fees: This is another major factor in most decisions to switch banks. Fees can be charged or waived on just about any service a bank offers, which is why many make a point of offering low or no fees on a selection of popular products. Do some research to determine how much you might be able to save in fees that you regularly pay at your current bank.
- Promotions: As previously mentioned, many banks will advertise their low fees or high interest rates to entice people to switch. Some even offer one-time cash rewards or other incentives for new customers. While these offers might sound attractive, always remember to read the details of the promotion, and don't decide on a bank based off a single appealing offer.
What else to look for
Before choosing a new bank or making the choice to leave an old one, keep in mind each service you rely on that bank to provide on a regular basis. Then keep in mind how much you pay for that service, either in fees or your own time.
For example, consider how often you need to withdraw cash. This can usually be done without a fee at a branch or ATM owned by your bank, so it makes sense to choose one with multiple locations near where you live. But it's common for banks to allow a few free ATM withdrawals per month at any location, or use an expanded network of machines to access cash for free. ATM fees are just one example of how choosing between one bank or another can become a complicated exercise.
It's also important to understand the digital tools and services your current bank offers, or if you can find something better elsewhere. It's common for banks to offer their own smartphone apps and websites that make it easy to conduct most basic transactions. Look into the features that your local banks provide on their digital and mobile platforms before making a switch. At the same time, don't forget to consider if and when you will need to visit a physical branch. Even younger consumers were found to have visited their bank in-person recently nearly as much as older customers who might not rely on digital services.
No matter what you're looking for in a bank, take the time to make an informed decision before you switch.