How To Switch Banks In Minutes

With the effects of the COVID-19 virus wreaking havoc on the health of Australians, as well as the economy, now may be a good time to consider switching banks to find the best rates.

There could be a few reasons you may want to consider switching banks:

1. Your bank has passed on multiple Reserve Bank of Australia cash rate cuts to your savings account or term deposit. If you’re earning little interest on these accounts, it may now be nothing better than a safe place to hold your money.
2. You always pay your credit card bill on time, but its ongoing fees are starting to sting.
3. Your bank isn’t giving you the best customer service support. You want to move somewhere with a better reputation.

Whatever the reason, with everything going on in Australia at the moment, now is not the time to have your money eaten away by high fees or interest rates.

So here’s how you can switch banks in minutes.

STEP 1: Outline your goals

There are a few types of ‘banks’ out there, including:

• Traditional banks, like the big four banks
• Credit unions, mutual banks and mutual building societies
• Online banks
• Neo banks

Firstly, know why you want to switch banks. Is it to grab a higher interest rate on your savings account? Is it to move to a bank with better customer service?

If you’re a big four bank customer and have never looked into other options, it’s worth considering whether you’re really with the right type of bank for your financial needs. This is especially the case if you have just stuck with the same bank since you were a kid.

There are advantages and disadvantages to each type of ‘bank’.

For example, traditional banks, such as Commonwealth Bank, are often seen as more reliable and stable. But they can come with higher fees or rates to help cover the cost of their overheads, such as branches. If you’re looking to avoid fees or high rates, in some instances traditional banks may not be what you’re looking for.

Online banks are, as the name suggests, purely based online. If you rely on face-to-face interactions with your bank, you may want to look to traditional banks, credit unions, mutual banks or mutual building societies that offer brick-and-mortar branches.

STEP 2: Compare your options

A good way to find a better option is to do a little research and see what’s out there.

The easiest way to do this is to use comparison tables. They allow you to compare apples with apples. You can filter down options to help you narrow your search, e.g. credit cards with no annual fees.

You’ll be able to view interest rates, potential fees and features. You can also filter down different companies now that you have a better idea of the type of bank that can help you reach your switching goal.

STEP 3: Get your paperwork ready

There’s always a little paperwork involved when switching banks. To sign up with a new bank, you’ll need to have a few personal details on hand.

Savings account applications only require a few things:

• Photo ID (driver’s license, proof of age card or passport)
• Tax file number

Credit card companies may require you to produce some, if not all, of the following:

• Proof of income: salaries or wages
• Proof of employment: two or more recent payslips
• Photo ID (driver’s license, proof of age card or passport)
• Details of additional assets and income (such as a savings account or managed investments)
• Good credit history
• Tax file number
• Details of any existing loans, such as personal loans, a lease or other credit cards
• Recent tax returns, particularly if you’re self-employed

Keep in mind that if you currently have outstanding debt on your credit card, you won’t be able to simply cut and run to a new provider. If you’re struggling with credit card debt, a balance transfer credit card may be a better suit for your financial situation.

STEP 4: List all your direct debits

Before you switch to another bank, make a list of every direct debit that may be attached to that account. This way when you make the switch, you can quickly set up new direct debits, so you don’t miss a bill.

For some services, you may have to call up the provider or chat to them online to let them know you’re changing banks. Make a list of these providers too so you can give them your new details when you switch.

STEP 5: Join up before you ditch your bank

Before your current bank closes your account, make sure to join with your new bank first. It can take some time to get a new debit or credit card, so you don’t want to be left in the lurch.

What about home loans?

Unfortunately, refinancing a home loan can sometimes take days, if not weeks.

This is because a bulk of personal information and paperwork needs to be transferred when refinancing a home loan. Plus, there could be extra steps, for example your new lender would have to value your current property. For more information on refinancing, please check out RateCity.com.au’s refinancing guide.

In good news, lengthy refinancing times will soon be a thing of the past for home loan holders thanks to open banking. This will make all sorts of data on customers and their banking much more transparent across Australian banks, as well as to customers.

Essentially, if you want to switch to a more competitive home loan, your personal information can be immediately accessible to your new lender, shortening the time it takes to refinance.