If you’re still using the same bank your parents did simply out of habit, Billshark would like you to at least consider that might be time to change banks. One thing you shouldn’t do is go through the hassle—and it is a hassle—of switching banks just because a teller was rude to you that day. The process of changing banks can even (marginally and temporarily) affect your credit score, as we’ll explain below.
So review this checklist for questions you should ask yourself and your prospective new bank before you make the switch.
- Why do you want to change banks?
Hopefully, it’s not for frivolous reasons, because it needs to be approached methodically. If there is one big thing that annoys you (low-interest rates, lousy customer service, etc.), you will want to ensure this is not an issue at your new bank. If it’s a collection of small things that get on your nerves, make a list of them. Then rank them in order of importance to you. It’s likely no institution will suit all your requirements, but it should satisfy the ones most important to you.
- What do you like about your current bank?
There must be something about your bank you’re happy with, or you would have switched already. As above, list the features most important to you and rank them.
Ask prospective banks:
- What fees do you charge?
Banks don’t just make money on the funds you’ve deposited with them. They also make a tidy sum by charging you fees, and they get more creative with them every year. How large a balance do you need to maintain to avoid a monthly “service” fee? What fees do they charge for using out-of-network ATMs? What do they charge for a bounced check? What do they charge to stop a check? If you still use paper checks, what do they cost? Do they charge for paper statements if you want them? If they waive fees for various reasons, what are they?
- How long a hold do you place on deposits?
If you use paper checks as opposed to automatic deposits, the bank may put a hold on some or all of the amount for a period of one or more days. If you do all your banking online or through mobile banking, you may think this doesn’t apply to you, but chances are you will have to deposit a paper check sooner or later.
The length of the hold may depend on the type of check or the institution it’s drafted from, how long you’ve been a customer, whether you have a habit of bouncing checks or any number of other restrictions. Remember that the institution has access to the full amount from the moment it’s deposited, but you may not. If you need access to the funds quickly, this is important to know.
- How do you sequence?
In other words, if you make a deposit on the same day that several checks hit, do they process the checks first (increasing the chance they’ll bounce) and then your deposit, or vice versa?
- Do you offer online and mobile banking?
Most offer at least the online option, but some still don’t provide mobile banking. Find out what kinds of services are offered online and through their mobile banking options. Also ask how they guard against fraud, how they will notify you of any suspicious activity on your account, as well as what happens if such activity is detected.
- How much interest is offered on various accounts?
Do they offer interest checking? If so, how much? Are there requirements, such as a minimum balance, to qualify for interest? What about savings? The interest offered on savings accounts can be woefully small. What other higher-interest deposit options do they have?
- What type of overdraft protection is available?
This is the category that, as we mentioned above, could lower your credit score. Overdraft protection offers you a way for the bank to cover a check or debit that you don’t have enough in your checking account to cover (“non-sufficient funds” or NSF). Different banks may offer you different ways to do this. If you agree to have them withdraw from your savings an amount sufficient to cover the overdraft, there’s no problem, unless they charge a transfer fee.
But if you need to set up a line of credit with the bank, they will do likely do a credit check, thus temporarily lowering your credit score a few points. In addition, find out the interest rate for this protection. If you don’t tend to bounce checks often, it may be better to skip this option.
Changing banks can be a hassle, but it might be worth looking into if a new bank will offer you lower fees, more convenience, or better customer service.
Meanwhile, let Billshark take a look at your bills. You’ll be surprised at how much savings we can find for you.