So you’ve had the same old bank account for years, and you’re wondering if there’s a better option out there. Before you make the switch, you first want to find a bank that aligns with your financial goals and life situation. The same account you signed up for back in college, for example, might not meet your needs today.
Luckily, switching banks has never been easier. In this post, you will learn about the most common reasons to switch banks.
How Do I Switch Banks?
The first step is choosing a new bank. Once you find the right bank for your needs, the next step is signing up online, which should be a relatively quick process.
As soon as your account is registered, you can move money in from your old account and start using the new one to make everyday transactions.
You can also set up direct deposits, bill payments, and any automatic payments that you want to be linked to the new account.
When you transfer funds, see if your bank offers Zelle, which is an online service that instantly transfers money from one bank to another for free.
Make sure to leave some money in your old account for a while. This helps meet any minimum balance requirements, avoid a monthly maintenance fee (assuming there is one and it’s waivable), and gives time for checks to clear and any automatic payments or deposits to transfer.
Once the account activity has been quiet long enough for you to feel confident that the switch is complete, then consider closing it out.
5 Reasons You Might Want To Switch Banks
Let’s face it. Changing your primary bank can be a hassle. You likely have bills drafted from the account, subscriptions tied to your debit card, and recurring direct deposits hitting the account each month.
Not surprisingly, a 2021 survey found that the average U.S. adult has used the same primary checking account for more than 17 years.
So why do people still switch banks? Here are some of the common reasons that drive people to switch banks (or why some people should!):
1. Fees
Nothing’s worse than paying unnecessary fees. If your current bank is constantly hitting you with them, it’s probably time to look elsewhere. In some cases, fees are unavoidable.
But an abundance of fees indicates that you have the wrong account. While some banks offer free checking accounts, many banks make tremendous amounts of money by charging fees. But that doesn’t mean you have to be their customer.
Avoiding these charges, however, comes with some level of responsibility. Do you tend to overdraft your account? If so, it doesn’t matter which bank you go with. You’ll probably have to pay overdraft fees or sign-up for overdraft protection.
Do you have difficulty maintaining a minimum balance requirement? If so, look for a bank that doesn’t require one. You can also avoid fees with many banks by adding direct deposits and using in-network ATMs.
Some bank fees are negotiable. For example, if you accidentally overdraft your account and get charged an overdraft fee, there's a decent chance that they will waive it — but only if you ask. You may not always get the answer you're hoping for, but banks generally want to keep loyal customers happy.
2. Online Banking Access
Most banks offer mobile banking, with features like online bill pay and mobile check deposits. If your current bank doesn’t, it might be time to look for a new account.
Mobile banking becomes all the more essential if you’re frequently on-the-go. Automatic transactions and bill payments can be executed quickly, even when you only have a few minutes on the bus or train.
If you can’t remember the last time you set foot in your bank’s physical location, why not consider an online-only bank?
Online banks generally have lower overhead, which usually translates to lower fees and higher Annual Percentage Yields (APYs) on your deposits.
3. Bad Customer Service
Not happy with the level of service you’re getting with your current bank? That’s a surefire sign to look for new options.
This is your hard-earned money, after all, and there’s no excuse to settle for bad customer service.
Big national banks provide in-person support at brick-and-mortar locations. Phone support and online chat are also common.
If you’re frequently struggling to resolve simple issues with your bank, remember that there are many other banks out there that you can switch to in just a matter of minutes.
Another thing to keep in mind is that banks approach customer service in different ways. Some banks operate to make their platforms so user-friendly that you won’t need help very often, while others employ 24/7 call centers.
If you prefer to have all of your accounts consolidated with one financial institution, you may also consider the “relationship banking” approach. Simply put, banks want as much of your business as they can get.
Many of the larger banks offer various services, such as savings accounts, checking accounts, investment accounts, retirement accounts, and mortgage loans — essentially serving as a one-stop-shop. Some banks offer personal finance consulting as well.
4. Life Changes
Financial life events are a big reason why people switch banks. For example, if you move out of state for work, your old bank might not have branches in your new location, so you have no choice but to switch banks.
Or, if you’ve recently been married, you may need a new joint account that both partners can access.
If you move frequently or travel a lot, it might make sense for you to switch to a national bank with locations across the country or internationally. On the other hand, if you don’t travel much, it might not be a bad idea to switch to a local credit union.
Also, as your financial situation changes, so too will your banking needs. If you’re earning more money now than you used to, you may qualify for premium bank accounts that are tailored to higher-income individuals.
Whichever bank you go with, make sure it’s FDIC-insured so that your deposits are protected if the bank goes under.
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5. Better Perks
Banks are constantly competing with one another to lure new customers with attractive perks. There’s no harm in switching to a new bank to get in on the action.
For example, many banks offer sign-up bonuses to new customers once their accounts have been active for a certain period of months.
Other banks offer rewards-earning debit cards and credit cards, interest-bearing accounts, and access to exclusive offers and experiences.
Taking advantage of these offers puts your money to work for you. In some cases, you can even earn a little extra income than with a traditional bank account.
Those who have saved enough money to meet a higher opening deposit requirement might want to consider a premium or private checking account. These accounts often come with free safe deposit boxes, higher interest rates on your deposits, and access to investment services.
Frequently Asked Questions
Next, let’s take a look at some of the most common questions we are hearing from our readers:
Which bank is best to switch to?
To answer this question, you first have to decide which banking services and features are the most important.
That’s because the best bank for you depends on your specific banking needs and personal financial situation.
For example, do you want to open a business account and a personal account? Do you prefer to have a personal relationship with your bank, where you’re on a first-name basis with the teller? If so, you should probably switch to a big bank, a local community bank, or your local credit union.
Is it important for you to have access to a vast ATM network that’s located throughout the U.S.? If so, switching to one of the big banks is probably a good call.
If mobile banking is important to you, and you’re savvy in using mobile apps, you might want to look into an online-only bank.
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Is it bad to switch banks?
No, it is not bad to switch banks, as long as you don’t leave any pending payments or bills hanging in your old bank account.
Diligence is key here. Make sure that you don’t have outstanding checks or automatic deposits lingering from linked accounts. It would be bad to switch banks if you make a mistake during the process that causes you to get hit with unnecessary overdraft fees.
When you decide to make a move, don’t be surprised if your current bank tries to keep you on board. Don’t feel guilty or let your emotions factor into the equation.
Does switching banks affect my credit?
The short answer is no. Switching to a new bank will not affect your credit score because you aren’t requesting a credit line or taking on any new debt. That being said, there are a couple of things to be aware of.
When opening a new bank account, your new bank will likely pull your credit score. This is known as a soft credit inquiry and shouldn’t affect your credit at all. Hard inquiries are initiated if you apply for a loan, and these can temporarily ding your credit score.
The only time you might see an impact on your credit is if you’re careless when switching. Let’s say you accidentally leave an open balance on your old bank’s credit card; if you don’t clear that up, the amount might get sent to collections, which would hurt your score.
If you leave your old account open, with a low balance, and then an automatic bill payment comes along that you forgot to cancel, this could result in an overdraft. If left unresolved, this too could hurt your credit score.
The bottom line is this: Stay on top of your bank account numbers and bill payments, and close your old account once the switch is complete. If you follow those steps, you won’t have any issues.
Don’t Be Afraid to Switch to a Better Bank
There are many valid reasons for switching over to a new bank. Whether you’ve experienced a financial life change or are simply looking for better customer service, there’s a bank out there to meet your needs.
If you’re still on the fence, remember that there’s no reason why you can’t switch banks more than once.
It’s not uncommon to have several bank accounts, which is completely fine as long as you keep things organized. Here’s to finding the bank that helps you accomplish your financial goals.
