How to tell if it’s time to switch banks
Switching banks can be a huge hassle, which is probably why we rarely do it unless absolutely necessary. Sometimes we leave due to poor customer service, and other times it comes down to dollars and cents. Although, I know so many people who hate their bank, but because it actually requires doing something to make a change, they never do.
Some people remain loyal to their bank for life (like my parents), but with so many different financial institutions available to you, there is absolutely no need to stay if you don’t think you’re getting the service you deserve, and at the price you want to pay! Banks are a business, and you should always be on the lookout for the best deal possible.
Here are a few things to consider when choosing a new bank:
If you’re paying bank fees for a service that can be obtained for free somewhere else – like monthly account fees, debit card transaction fees, cheque ordering, or other miscellaneous banking charges – it might make sense to start thinking about leaving your bank.
Up until I graduated college, I did all of my banking at TD Canada Trust. Because I was a student, my chequing account was free, and I had basic services like a savings account, line of credit, and a visa card. It wasn’t until I graduated that I learned I would need to start paying $12.95/month for my chequing account.
However, most financial institutions that charge a fee for their chequing account will usually waive the cost if you keep a minimum monthly balance. For example, TD would waive the $12.95 fee if I kept a minimum of $3,000 in my account at all times. But as a recent graduate, I didn’t (and still don’t) have an extra $3,000 that I can have siting in an account not earning interest. Granted, interest in savings accounts are minimal right now, but something is better than nothing.
So, desperate to avoid paying banking fees, I moved over to PC Financial‘s free unlimited chequing account. That was over 5 years ago, and I have saved over $775 in banking fees alone just by making the simple switch. Since then, I have also opened up a second chequing account with ING Direct. ING offers things that PC doesn’t offer, so when I need to utilize those services, I initiate a free money transfer, and use ING instead. (If you have yet to sign up for ING Direct, consider using my Orange Key for a $25 bonus: 30874855S1)
When you put your hard earned money into the hands of a financial institution, you have to be able to trust them. Whether it’s a bad experience with one particular employee, a pattern of poor customer service, or unacceptably long telephone hold times every time you call in, if you aren’t comfortable using their services, it’s time to take your money and run. The runaround I got with TD Canada Trust last year was one of the worst customer service experiences of my life. Nobody knew how to help me, I kept getting passed back and forth between customer service and the branch – and nobody once offered me a solution.
I’ve actually proactively opened up an account with a bank because of their actions through social media. ING Direct is a great example of a company that gets how to market their financial products to those engaged through social media. They understand that in order to gain the trust of potential customers online, they have to become part of the conversation and part of the community. Because of their terrific customer service and social media influence, I now have a chequing account, three savings accounts, and a TFSA account with them.
If your bank is not conveniently located, it makes perfect sense to switch to one that is. Perhaps you first chose your current bank because it was closest to your house. But over the years, you’ve moved to an area with no branch close by.
Convenience can also vary between distance to your nearest branch, to the services offered by the bank itself. If you need business accounts, 24-hour ATM access, online banking, mobile apps, or more personalized service, finding a bank that fits your needs is crucial. Sometimes we can get so stuck in a routine that we forget there are other options available out there that will help us increase our daily productivity and lower our frustration levels.
When you deposit your money into a savings account with a low interest rate, you are potentially losing out on free money. TD Canada Trust’s Every Day Savings Account earns 0.25% for balances up to $5,000 (0.50% for anything above that), and their “High Interest” Savings Account earns 0% for anything under $5,000. Meanwhile, ING Direct offers 1.35% with no minimum balance required.
Once I was speaking with a friend who had about $4,000 in a “savings” account that offered 0.05% interest. Yes, you read that correctly. 0.05%. I asked why she didn’t move her money to a bank with a higher interest rate (at that time, PC Financial was offering 4% interest), and she replied by saying “I don’t need the money.” Um, what? The comment just destroyed me. Apparently I found the one person in the world who doesn’t like free money. :)
Why you shouldn’t switch banks
While it’s a good idea to do research and know what other banks are offering, you might find that what you currently have works for you. Additionally, you should always ask your current bank what they can offer you to keep your business. A major benefit of staying with a bank is maintaining a long account history. Sometimes it’s easier to get what you need – like a loan – when the bank can see that you have a long-term account that is in good standing.
I personally have absolutely no loyalty when it comes to banks, and have accounts with PC Financial (chequing/savings/TFSA/credit card), ING Direct (chequing/savings/TFSA), TD Canada Trust (line of credit/RRSP/TFSA), VanCity Credit Union (mortgage), and CIBC (credit card). It all comes down to dollars and cents to me, and it’s worth the hassle of switching banks every few years if it means that I’m getting the most for my money.
What are some of the reasons you’ve switched banks for?
Author: Krystal Yee
I’m a personal finance blogger and marketing professional based in Vancouver. I’m a former Toronto Star (Moneyville) columnist, author of The Beginner’s Guide to Saving and Investing, and co-founder of the Canadian Personal Finance Conference. When I’m not working, you can usually find me running, climbing, playing field hockey, or plotting my next adventure.