Signs It’s Time to Leave Your Bank (and How to Choose a New One)
I am not a regular customer of the bank. Over the past 5 or 6 years, I have changed bank several times due to fees, poor customer service, or simply better options elsewhere. I do not regret anything. If you are thinking of quitting the bank, here are some signs that it might be time to grit your teeth.
Fees keep growing
When I left my big bank many years ago, it all started with a commission.
They sent me an email saying they were going to start charging me for my checking account as I am no longer a student. I thought it was understandable, but it didn’t end there. The rest of the fees began to accumulate quickly. Their overdraft policy, which was so bad that it ended up making the headlines , deceived me. They delayed my direct deposit and placed my highest debits first, manipulating me into paying over $ 300 in overdraft fees right away.
This is a fairly common scenario. Banks are trying to steal all kinds of hidden fees. For instance:
- An increase in the minimum balance on your account is required
- Return Mail Fee (charged if you don’t update your address)
- Processing large loans first, and deposits last – will push you to a loss
The good news is that if your bank charges any new fees from your account, it should let you know and send you a new fee schedule. And in any case, keeping stock in the account is good financial behavior. However, you don’t have to bypass bad bank policies. You are a client; they should work in your favor.
Online banking is becoming an increasingly popular option. It’s convenient, and banks save money on overheads, so they generally don’t charge customers a commission and can afford to offer above average interest rates and waive ATM fees . In fact, some banks will generally pay you to open an account through various incentives. Why should I put up with punishment if another bank is willing to reward me instead?
For example, I recently switched to Santander Bank because they were offering $ 10 a month just to open a direct deposit for them. They’ll pay you another $ 10 if you set up two automatic bill payments with them. And other banks now offer interest on checking accounts. That’s not much, and there is a fine print to support those incentives, but the bottom line is that if your bank charges you a commission on commission, it’s a big red flag that it’s time to change.
Local banks, credit unions, and online banks are usually more inclined to offer free checks. You can use a website like Bankrate to compare bank details and fees.
Customer service is useless
Years later, I left another bank because the customer service was terrible. It was notoriously difficult to work with them if you had problems with your account. When I had fraudulent charges, they refused to refund me the overdraft fees received as a result of these transactions, so I decided to leave. Of course, as soon as they found out that I was closing my account, they were more willing to abandon them “as a sign of courtesy,” but it was too late.
If your bank does not have very good customer service, there are many other banks that are easier to work with. I only use the online bank ( Ally ), he is easy to reach, he is friendly and when I have a problem they actually solve it rather than reading the script and pushing me to someone else. Simple is another reliable online banking option .
At a minimum, your bank should make it easy:
- Find customer service contact information
- Actually find a representative
- Answer your problem clearly
You should also make sure they have online tools available. Most banks have live chat support and allow you to keep records of your conversations with representatives.
Their online options suck
Most banks these days offer excellent online services. Ideally, you want to be able to do the following online or through an app:
- Pay bills (no commission)
- Transfer money between accounts and to other banks
- Talk to a representative
- Order new checks
- Deposit checks
Lack of online convenience doesn’t necessarily mean a bank is bad. Credit unions, for example, usually offer great customer service and perks, but sometimes their online services fail because they are small transactions. But if convenience is important to you, there are many banks where it is easier for you to refuse to contact your local branch.
How to choose the best bank
Once you decide it’s time to switch, do your research and make sure you choose the bank for the right reasons. When I switched to Chase, for example, I only did so because they offered some incentive rewards. This was the only thing I researched. It was a stupid reason and she came back to bite me later.
There is more to the bank besides the absence of commissions . The first thing you need to do is make a list, however quick in your head, of the things that matter to you. This could be:
- Robust overdraft protection policy
- Free access to ATMs
- Convenience online
- Nearest branches
Once you know what you are looking for, it will be easier for you to narrow down your search because there are many options. Again, you can start searching on sites like Bankrate , NerdWallet, or My Bank Tracker . When I researched new banks, I looked for review posts based on what was important to me. Therefore, if free ATM access is your top priority, you should quickly search the best banks that offer this incentive and find something like this .
Make sure they are FDIC insured
It goes without saying that your bank must be FDIC insured. This means that in the event of bankruptcy, your money is protected by the Federal Deposit Insurance Corporation . The FDIC states that checking accounts, savings accounts, and certificates of deposit (CDs) are usually insured up to the statutory limit of $ 250,000. Chances are your bank is insured, but if you want to be sure you can always search the FDIC website . Please note that investment accounts are not FDIC insured, but we are strictly discussing traditional checking and savings accounts here.
Read the fine print to learn about fees
In your research, you should definitely look at what fees the bank charges. Make sure they don’t have a monthly maintenance fee or require a minimum monthly balance. Or, if they do have minimum balance requirements, make sure you like it. Some bank bonuses offer a reward for having a certain amount in your account, but if you don’t, they will charge you a fee. Perhaps the reward is worth it . Your bank should also have a simple overdraft protection policy. Ideally, it should be free and your checking and savings accounts linked so that in the event of an overdraft, they simply withdraw money from your savings account for free.
Research transaction restrictions
You also want to check the bank’s transaction limits. Savings accounts are federally regulated and only allow six ACH transactions per month, but beyond that, you should be able to withdraw, deposit, or transfer money between your accounts as you see fit, without being charged a fee.
The case for credit unions
There are many reasons for choosing a credit union over a bank . Namely, credit unions are non-profit, and customers are actually members and owners. A credit union usually works to your advantage when it comes to fees, policies, and loans, and you can’t say the same for a bank, especially a large one.
When you choose your bank or credit union, it’s time to change, and it’s easy enough with a little preparation . In fact, many credit unions offer “switch kits” to help you with this process.
Credit unions are also a great option if you have a rough banking history or poor creditworthiness because they are usually a little more lenient with the application process.
What to do if the bank refuses you
If you have bad credit, you may not have a choice of bank . Banks do not use your credit report when deciding whether to approve you. They use a separate report called ChexSystems. My Bank Tracker explains how this process works:
In a typical account application process, the bank uses your name and social security number to regularly check financial data. The very first step in this data validation is usually to review your ChexSystems report. The information included in the ChexSystems report reveals any bad banking customer history, such as unpaid overdrafts or bad checks you wrote. Other information reported includes security warnings or freezes.
If your banking history is questionable, you may not get approved. But you still have options. You can write your own report and challenge any potential negative points . You can send a letter to the prospective bank asking them to reconsider your decision. However, the easiest option is probably to contact your local bank or credit union, which is more lenient and willing to work with you.
Bank loyalty doesn’t really pay off . You might think that your bank will be more willing to work with you because you’ve always been with it, but in the end, they just want to keep customers – new or old.
If your bank is sneaking up on you with fees, ignoring your concerns, or simply not meeting your needs, you shouldn’t worry about switching because there are many other options.