Higher savings rates, lower fees, and better customer service: For every reason that motivates you to switch banks for checking or savings accounts, there’s an opposite reason to avoid the hassle.
Changing banks, however, doesn’t happen often. Only 4% of customers switched banks in a year, according to J.D. Power’s 2019 U.S. Retail Banking Satisfaction Study.
“Change is hard, especially change around money,” says Dale Shafer II, certified financial planner and founder at Life Moves Wealth Management in Scottsdale, Arizona.
Here are five obstacles to switching banks and how to address them.
1. You’ve only known one bank
Banking at the same institution as your parents had can be cozy and familiar, whether you’re young or decades into adulthood. Or maybe you started a banking relationship later in life. Either way, when you’re ready to move on, leaving as a longtime customer can be a big deal.
When “you grow up with that establishment, it can be difficult” to leave, says Shafer. His oldest son “was almost afraid to do it” because he wrongly believed that he might damage his parents’ relationship with their bank.
Tip: Remember that you have power as a customer. Research fees and services at other banks to see how they compare to yours and whether they would be more beneficial to you. Choosing a new bank involves knowing your must-haves.
2. You’ve set up a lot of automatic payments
If you have recurring transfers and automatic bill payments through your checking account, you’ll need to change them to a new bank manually. And don’t forget about any direct deposits.
Ask yourself, “How many different services are connected to this bank account or that credit or debit card? It’s your Spotify, your gym, anything you’ve subscribed to,” Shafer says. “It’s a time commitment.”
Tip: Make a list of all subscriptions, memberships and other recurring payments tied to your checking account as part of the steps to switch banks. Check bank statements for at least the past 12 months to catch monthly and annual charges.
3. Your bank requires a phone call or paperwork to close
Banks make it easier to open an account than close one. Nearly all 20 largest U.S. banks with personal checking or savings let you apply online. Still, few of their websites mention the ability to close accounts online, according to a NerdWallet analysis. You typically must end a bank relationship by calling, visiting a branch or mailing a request.
