Change can be difficult whether it's switching jobs, moving to a new city or moving your money from one financial institution to the next. For that reason, plenty of people avoid ever making a financial switch, leaving their money in the first account they ever opened. US News and World Report noted that, according to the World Retail Banking Report 2015, only 11 percent of 16,000 bank customers in 32 countries were likely to switch or leave their bank.
Although switching from one financial institution to another can seem like a challenge, in 2015, Kiplinger reported the results of a survey conducted by Kasasa that found that 81 percent of people who did make a financial switch found that it was easy to do. If you aren't happy with your current banking situation, there's no reason to drag your feet about changing financial institutions. If you're not sure if now is the time to switch, take a close look at your relationship with your bank and see if you might be treated better somewhere else.
Reasons to Change Financial Institutions
While not wanting to change the status quo and the ease of staying where you are can be compelling reasons not to switch financial institutions, there are equally compelling reasons to make the change. In fact, a 2015 survey of 1,000 Millennials, conducted by Experian, found that three-quarters of them would make the switch, if the incentives were clear enough. If you think you are ready to make a change, here are few questions to ask yourself first.
- Can You Get a Better Rate Somewhere Else? Sometimes, your savings can earn a better interest rate if you switch financial institutions. Although there are exceptions, online banks and credit unions often offer higher rates than brick and mortar commercial banks.
- Will You Pay Lower (or No) Fees At a New Financial Institution? Fees can really eat into your savings. If you're giving a bank $5 per month just for the privilege of keeping your money there, ask yourself what you're getting out of the deal. $60 a year might not seem like much, but if you keep an account open for 10 years, it turns into $600, which is a hefty price to pay. It's not just monthly fees to think about. Some banks charge high fees to use the ATM, fees if you overdraw, and fees if your account falls below a minimum balance.
- Can You Find an Account with a Lower Minimum Balance Requirement? Speaking of a minimum balance requirement, if your financial institution has one, and you can find an account with a lower (or no) balance requirement, it can be worth it to make the switch. If your bank makes you keep $100 in a checking account, that $100 isn't doing anything for you, since it's not earning interest and you can't spend it.
- Is Your Current Bank Lagging Behind? While many financial institutions offer online and mobile banking these days, some still don't. If your financial institution is one of the banks that's lagging behind when it comes to technology, it can be worth it to change things up. Having the ability to check your account balance, transfer funds, and pay bills at any time of day, from wherever you are, can be very convenient. The same is true of mobile check deposit, which lets you take a picture of your check to deposit it, instead of having to stand in line for a teller or ATM.
- Does Customer Service Leave Something to Be Desired? Some banks or credit unions are a lot better at customer service than others. If it's difficult to speak to a real person when you have a problem, or if your bank won't budge on an issue no matter how long you've been a customer, it might be for the best for you to take your business elsewhere. No matter how much money you keep in an account, it's important that your financial institution treats you with respect.
If you're getting ready to switch financial institutions, take a look at the deposit accounts available and compare them to your current accounts. Because of credit unions not-for-profit status, they are usually able to offer lower loan interest rates and lower fees than banks, who are driven by profit. You might save a considerable amount of money, time and hassle switching to a credit union that doesn't charge monthly fees and that offers online and mobile banking options.