I am not a loyal banking customer. Over the past 5 or 6 years, I've switched banks a few times because of fees, poor customer service, or just better options elsewhere. I regret nothing. If you're thinking about leaving your bank, here are some signs it may be time to bite the bullet.
Fees Keep Creeping Up
When I left my big bank years ago, it started with a fee.
The bank sent me a letter telling me they were going to start charging me for my checking account since I wasn't a student anymore. Understandable, I figured, but it didn't stop there. The other fees started to pile up quickly. Their overdraft policy, which was so bad it eventually made headlines, screwed me over. They delayed my direct deposit and posted my highest debits first, manipulating me into paying over hundreds of dollars in overdraft fees at once.
This is a pretty common scenario. Banks try to sneak in all kinds of hidden fees. The good news is, if your bank tacks on any new fees to your account, they have to let you know about it and send you a new fee schedule. And it's good financial behaviour to keep a cushion in your account, anyway. However, you shouldn't have to work around crappy bank policies. You're a customer; they should work in your favour.
If your bank is charging you fee after fee, it's a big red flag that it's time to switch.
Customer Service Is Unhelpful
Years later, I left another bank because their customer service was terrible. They were notoriously difficult to work with if you had issues with your account. When I had fraudulent charges, they refused to refund me the overdraft fees that resulted from those transactions, so I decided to leave. Of course, once they knew I was closing my account, they were much more receptive to waiving them "as a courtesy," but it was too little too late.
If your bank's customer service isn't very good, there are plenty of other banks that are easier to work with.
At a minimum, your bank should make it easy to:
- Find their customer service contact info
- Actually get a hold of a representative
- Address your issue clearly
You also want to 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 are great about offering online services. Ideally, you want to be able to do the following online or through an app:
- Pay bills (without charging you a fee)
- Transfer money between accounts and to other banks
- Talk to a representative
- Order new checks
- Deposit checks
Now, a lack of online convenience doesn't necessarily speak ill of the bank. Credit unions, for example, usually offer excellent customer service and incentives, but sometimes their online amenities aren't up to snuff because they're smaller operations. But if convenience is important to you, there are plenty of banks that make it easier to avoid going to a local branch.
How to Pick a Better Bank
Once you decide it's time to switch, do your research and make sure you pick a bank for the right reasons. When I switched to a different bank, for example, I only did it because it offered some travel rewards incentives. That was the only thing I'd researched. It was a stupid reason, and it came back to bite me later.
There's more to look for in a bank besides no fees. The first thing you want to do is make a list, even a quick mental one, of what's important to you. It might be:
- A solid overdraft protection policy
- Free ATM access
- Online convenience
- Nearby branch locations
Once you know what you're looking for, it's easier to narrow down your search, because there are a lot of options out there. When I was researching new banks, I looked for roundup posts, based on what was important to me. So if free ATM access is your top priority, you'd run a quick search on the best banks that offer that incentive.
Read the Fine Print for 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 a minimum balance requirement, make sure you're cool with it. Some bank bonus offers reward you for having a certain amount in your account, but if you don't, they will charge you. The reward might be worth it for you. Your bank should have an easy overdraft protection policy, too. Ideally, it should be free and your checking and savings accounts will be linked so that if you overdraft, they simply pull the money from your savings account at no charge to you.
Research Transaction Limits
You also want to check the bank's transaction limitations. Some accounts only let you withdraw money a certain number of times for free or charge you if you going into the branch to make transactions. Do your homework and understand all the different arrangements when you shop around for a new bank.
The Case for Credit Unions
There are plenty of reasons to choose a credit union over a bank. Namely, credit unions are not-for-profit, and the customers are actually members and owners. A credit union usually works in your best interest when it comes to fees, policies, and loans, and you can't really say that about a bank, especially a big one.
Bank loyalty doesn't really pay off. You might think your bank is more willing to work with you because you've been with them forever, but at the end of the day, they just want to keep customers — new or old.
If your bank creeps up on you with fees, ignores your problems, or just generally doesn't fit your needs, you shouldn't have any qualms about switching, because there are plenty of other options out there.
Image by Nick Criscuolo.