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Should You Switch? Considerations when Changing Banks
Knowing if and when to change banks may be a tough decision.
As saving rates continue to rise, more people are considering changing banks. Approximately one third of Americans have considered moving their accounts in the past year, according to a recent survey by GoBankingRates.1
Thinking about switching banks but aren’t sure if it’s the right time? We’ve got you covered. We'll discuss some common reasons you may choose to make the switch, and a few tips to help you prepare.
Key Takeaways
When looking for a new bank, choose one that meets your needs and helps you grow toward your financial goals.
There are several reasons you may choose to switch to a new bank, such as wanting a higher savings rate or needing easier access to your money.
Taking time to prepare for the switch could make the change easier overall.
Common Reasons for Changing Banks
With only a few exceptions, you’re usually able to move your checking or savings account to a new bank whenever you want to, as long as your account is in good standing. But there are a few telltale signs that it might be time to make a change, such as:
Wanting a Higher Rate. Savings accounts earn interest on the funds you keep in them, but the rate you earn varies from bank to bank. Some checking accounts may also earn interest. By switching to a new bank, you may be able to get a higher rate on your checking or savings account, which could help you build your savings faster.
Needing Better Customer Service. Banking should be a pleasant experience, whether you’re doing it in-person or online. If you don’t feel valued as a customer at your current bank, you may choose to switch to a new one.
Moving to a New Home. If you’re moving to a new town, accessing your money at your current bank may not be convenient. Switching to a digital bank could make taking care of your finances easier, wherever you move.
Digital Money Management. Managing your money should be easy. Digital banks often have apps and online portals that offer real-time information on your money and may help you make more intentional and informed financial decisions.
Ditching Fees. Some banks charge fees for their checking and savings accounts, and those fees could really add up. By moving to a new bank, you may be able to get rid of those fees.
Keep in mind that you don’t need to have a defined reason to switch banks. If you believe it’s in your best interest, it’s worth exploring your options.
Preparing to Make the Switch
Switching to a new financial institution is always going to take time, but there are a few things you may be able to do to make the switch easier and set yourself up for success before transferring your money.
Consider Your Wants: Before you make the switch, think about what you want in your new bank. This could be anything from lower fees to better services and products. Once you identify these features, look for banks that provide them.
Review Closing Requirements: Every bank has different requirements in place for closing your account. They may ask you to provide a letter to close your account or call to speak with a representative trained in closing accounts. It’s a good idea to review these requirements before you choose your new bank so you have time to gather information and prepare any documents you may need.
Research New Banks: Before you switch banks, you need to know which bank you want to switch to. Take your time and research each bank you’re interested in. Look at their reviews to see what current customers have to say about their services and consider the types of products, such as checking and savings accounts, they offer.
Ultimately, you want to choose a bank that meets your needs, which may include providing products and services that are important to you or offering access to customer service whenever you need them.
Considerations when Choosing a New Bank
There are a few primary factors to research when searching for a new bank, especially when it comes to choosing a checking or savings account.
Minimum balance requirements: While many banks have done away with minimum balance requirements, some still have these in place and may charge a fee if you don't keep enough money in the account.
Fees: Some institutions charge customers fees for different things, including account maintenance, transfers, taking money out at ATMs, or not maintaining a sufficient balance.
Rates: Depending on the institution, the Annual Percentage Yield (APY) on a savings account may be as low as 0.01% APY. With rates that low, it’s difficult to grow your money over time. As of September 2023, many digital banks were offering rates of 4.00% APY or higher.2
Bonus offers: Some institutions offer new customers higher rates or a “bonus” if they deposit a certain amount of money during a specified time period.
Security: When considering where to keep your money, you may want to choose a bank that offers FDIC insurance. The insurance limits to protect your money are up to $250,000 per depositor, per ownership category, per institution.3
You may come across other account features during your research, such as budgeting or expense tracking tools. Take note of these if you think they may benefit your financial journey.
Final Thoughts
Switching banks may be the key to unlocking higher rates or making money management easier. Whatever your reason for making the change, take some time to gather the necessary information and make a list of steps to follow. This preparation may go a long way towards smoothing out the process.
When considering a new bank, be sure to watch out for any fees or requirements that could impact your ability to grow your balance over time. Think it’s time to make a change? Learn more about how to switch banks today.