What to consider before switching banks
Your relationship with your bank is a pretty important one and that’s why you should make sure it’s as happy as it can be. If you’re not satisfied, then maybe it’s time to review your current situation and possibly consider a change.
Of course, the thought of switching banks isn’t too appealing for some as it can seem like a lot of hard work. But it doesn’t have to be! Even thinking through the process can be valuable in itself. The Credit Savvy team have put together a list of things to consider before you make the switch:
Do your research
First things first, make sure you understand exactly what you currently have and all the nitty, gritty details. This includes your accounts, interest rates, fees, features, benefits, reward points and also practical elements such as apps and (if applicable) access to branches and ATMs.
Next, make sure you understand how any alternative bank or provider compares against these elements. Remember to look at the features that you’re most interested in or use regularly. It’s no use switching to a bank with limited ATMs if you’re a cash only kind of person.
It’s also a good idea to check online reviews of your potential new bank and talk to friends for their experiences to get an idea of the customer experience.
Check for any costs of moving
Whilst reviewing your existing arrangements, make sure to check for any fees that might be due. For example, with a home loan there could be an exit fee on your existing loan and then an establishment fee for a new one. Beware that fixed rate loans might also have break or early repayment fees too.
Another common thing with home loans are ‘package’ deals which can provide bonuses or discounts based on holding multiple products from the single provider. If you’re planning on moving all parts of your banking relationship to another provider, then you might find an equivalent package but if you’re only moving some parts, you will want to understand the overall impact of the changes.
Another potential cost can be in the form of missed bonuses (reward point bonuses) or missed interest (such as savings account bonus interest offers). Talking of reward points, do you have some points on your account that you’ve stashed away? If so then check whether you can spend or move them before you switch.
Ultimately, remember that different providers can charge different fees, but some might be negotiable. Just make sure the cost of moving doesn’t outweigh the benefits of switching!
Understand what you’ve got set up and who you need to tell
This rates up there as one of the main reasons people are reluctant to switch: administration!
Direct debits and recurring payments can be very helpful and convenient but won’t automatically follow you when you switch providers. However, your bank can help you here: your existing bank can tell you which direct debits you currently have set up; or you can even authorise your new bank to contact relevant payees to let them know your new account details.
Also, don’t forget to notify people who regularly send or receive money from your old accounts, like your employer, so you don’t miss any payments!
With open banking coming soon, it should be even easier to switch. Once it’s in place and the providers are ready, you should be able to facilitate the transfer of your accounts, direct debits and information through secure apps at the click of a button or two.
Ensure you have a copy of all your statements
If you do decide to make the switch, make sure you download your statements either in pdf form or into a spreadsheet, as you may find you need to reference or provide them for a future application.
Talk to your (existing) bank
As part of your research phase and especially before making a commitment to move, it can be a good idea to talk to your existing bank. If you find a better deal at a competitor, you might find that your existing provider is willing to match or even beat their offer.
Check you’re putting your best foot forward
If your potential switch involves credit products such as credit cards or loans, then you will have to apply with your new lender-to-be. This means your personal and financial details will be required by the lender to assess your credit eligibility. A credit check may be requested to gain access to your credit history and repayment information. This will leave a credit enquiry on your credit report and could have an impact on your credit score.
Have you checked your credit score recently? You can check and monitor your credit score for free at Credit Savvy!
Thinking about switching your home loan? Find out what you need to know before applying in our article: How to apply for a mortgage under tougher lending conditions. You might also like to check out our Learning Hub for plenty of useful articles to review.