Breaking up with your bank? Read this first

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November 03 2021
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There are a few questions you should ask yourself before you break up with your bank and start looking for a better one.

You shouldn’t let your bank take your business for granted, but neither should flee at the first hint of a rate rise.

Speaking to nestegg, 86 400 CFO Belinda Hogan said that there are a number of things that consumers need to keep in mind before changing banks.

Firstly, she recommended taking a closer look at the fine print associated with your current bank and determining whether leaving will involve any fees.

“Bank terms and conditions vary, and you should spend time reading through these before you make a commitment,” Ms Hogan said.

Once you’ve calculated the baseline costs of moving your money, you’ll have something to keep in mind when you’re shopping around for a better deal.

While banks are often seen as something of a utility and a necessity, Ms Hogan emphasised the importance of thinking of them as a product and whether they meet your needs.

“Compare the rates of fees and charges, and make sure your money will be accessible in the ways you want — whether that be through online, over the phone or in person,” she suggested.

Asked what consumers should look for in a bank, Ms Hogan said that the first thing that consumers should consider is whether a bank’s products seem geared towards helping consumers save money.

“In today’s low-interest rate environment, cultivating strong savings habits and reducing spending where possible will be far more effective in the long term than small differences in interest rates,” she said.

Specifically, Ms Hogan said consumers should consider whether a potential bank will make it easier to set savings goals, keep track of bills and set up their money in a way that suits their needs.

“If you’re someone who regularly withdraws money, it’s important to look at the conditions surrounding them. Look into whether there is a limit on withdrawals per month, and if so, what is it and how much will you have to pay if you cross it,” she said.

Once you’ve found an offer that’s competitive with your current bank, Ms Hogan said that it could pay to run it by your existing one.

“Share the competitive offer you find with your existing bank — it might offer you a better deal to retain your business,” she explained.

If they can’t win you back, they can’t win you back. But it costs nothing to ask, and it can leave you better off in the long run.

If you do decide to break up with your bank and find another, Ms Hogan recommended opening your new account at least a week or two before you plan on making the final switch in order to see if reality delivers.

For peace of mind, Ms Hogan said that it could be worth making a few online purchases with your new account before you start the process of sharing your new account details with your employer and any bills that are direct debits.

“Don’t forget subscriptions on your card like Netflix and Spotify,” she added.

Even if you’re happy with your new bank, Ms Hogan warned against the perils of closing your old account too quickly.

“It may take longer than you expect to update direct deposit and automatic billing instructions. Wait at least a month or two to be sure that everybody is using your new account information.”

About the author

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times.

About the author

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times.

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