Should You Switch Banks? Considerations When Changing

Knowing if and when to change banks may be a tough decision.

While roughly 85% of Americans report being happy with their bank,¹ there are times when switching to a new financial institution makes sense.

But knowing if switching banks is the right move can be tough if you’re not sure what to look for. We’ve got you covered. We’ll discuss some common reasons why you may choose to make the switch and give you a few tips to help you prepare.

Key Takeaways

• When looking for a new bank, choose one that meets your needs and helps set you up to reach your financial goals.

• There are several reasons why 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

In most cases, you’re able to move your checking or savings account to a new bank whenever you want as long as your account is in good standing.

There are a few telltale signs that it might be time to make the change, including the following.

• Wanting a higher rate: Switching to a new bank could give you a higher Annual Percentage Yield (APY). Remember APY is rate you earn with a deposit account, most commonly a savings account. The higher the rate, the faster you could build your savings.

• Seeking 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 town: If you’re moving to a new town, accessing your money at your current bank may be less convenient. Making a switch may make sense. Note that if you switch to a digital bank, you could access your account completely online, no matter where you move in the future.

• Adopting digital money management: Speaking of digital banks, maybe you’re ready for a little innovation in your banking with online and mobile banking technology. If so, trying a digital bank could help you manage your money more easily.

• Eliminating 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 entirely.

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.

Things to Consider When Changing Banks

There are a several factors to research when shopping for a bank, especially when it comes to choosing a savings account or a checking account. What should you look for? Consider the following.

• 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. Consider searching for a bank that offers accounts with no minimum balance requirements as this could save you money in the long run.

• Fees: Some institutions charge customers fees for different things, including account maintenance, transfers, taking money out at ATMs, or dropping below their minimum balance threshold. Look for a bank that doesn’t charge fees just for the privilege of having an account at their institution.

• Rates: Depending on the institution, the annual percentage yield on a savings account may be as low as 0.01%. With rates that low, it’s difficult to grow your money over time. Look for a bank that offers a higher APY. As of September 2024, many digital banks were offering rates of at least 5.00% APY.²

• Bonus offers: Some institutions offer new customers higher rates or a “bonus” if they deposit a certain amount of money during a specified period. Banks that offer this bonus could help you boost your savings.

• Security: When considering where to keep your money, you may want to choose a bank that offers FDIC insurance. The insurance protects up to $250,000 per depositor, per ownership category, per institution if the bank fails or goes under.

You may come across other account features during your search such as budgeting or tools that help you track your expenses provided by the bank. Take note of these if they’re important for your financial journey.

How to Prepare for the Switch

Switching to a new bank or financial institution is always going to take time, but there are a few things you may be able to do ahead of time to make the switch easier. Keep these tips in mind as you start your search for a new bank.

• Consider your wants: Before you switch to a new bank, think about what you want in your new financial institution. This could be anything from lower fees to better services and products. Once you identify those must-have features, look for banks that provide them.

• Review account closing requirements at your existing bank: 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, 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 and accounts they offer.

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 Jenius Bank’s savings accounts today.