As a teenager, I opened my first checking account at a new community bank in my hometown. Its sales pitch was “the world’s most convenient bank,” and for a while it delivered on this promise with friendly service, short waits, and late closing hours. Also convenient was the fact that my student account was exempt from fees.
Alas, my bank got so popular that it was bought by a bigger bank. The new owner kept the old tag line but its service was far from convenient. In fact, the experience routinely reminded me of that one time I was waiting in line to have my ticket dismissed at traffic court and all the clerks were away from their desks but visible as they celebrated a birthday in a back room.
It’s hard to switch banks. They know that and use it to their advantage. Sure, no one wants to pay a “maintenance fee” for an account that doesn’t need maintaining, but would you rather grumble about the fee every month and pay it anyway, or overcome the obstacle of setting up a new direct deposit and revising the account information for every bill you auto-pay online?
I stuck it out with the world’s least convenient bank for all of these reasons until I received notification that I was too old for a student checking account. I would have to start paying the dreaded maintenance fee. Instead I closed that account and opened an online checking account with no fees and I haven’t looked back since.
Is it time for you to break up with your bank? Whether you’re already considering it, or a major life change necessitates a new account, consider this article your wake-up call.
What’s Ahead:
1. Consolidate accounts after marriage
The average age at which Americans get married is 27 for women and 29 for men. By that point most people have at least one bank account of their own, more if you include savings and credit card accounts. Not every couple merges their finances into a joint account, but there are plenty of reasons to do so, especially if one or both of you are paying maintenance fees.
For the record, my husband and I only joined our names on a checking account about two years ago, after six years of marriage. But I wish we’d done it sooner—we save money and time now that our budgeting and transactions are centralized. I did hold on to my online account for occasional discretionary purchases, but since there are no fees it isn’t costing me anything to keep it open.
2. Keep your money on Main Street
Buying local is all the rage, so why not bank locally as well? Community banks and credit unions usually offer the same conveniences (such as online banking) as bigger banks but with lower fees, higher interest rates on savings accounts, and better customer service. They also tend to have more flexibility and regional insight when it comes to mortgages and other lending decisions. And while it’s an abstract benefit, there’s something to be said for the warm feeling of keeping your money in your community instead of sending it to Wall Street.
3. Do a little spring cleaning on recurring charges
Have a gym membership you don’t use or an identity theft protection service you don’t even remember signing up for? Monthly debits seem like a convenient way to pay for services and memberships, but they have a way of multiplying like backyard mushrooms. Before you know it, it’s death to your bank account by a hundred tiny cuts.
Businesses like recurring charges because they solve the problem of late or unpredictable payments. They’ve even wised up to the fact that linking auto debits to credit and debit cards creates a hassle every few years when customers receive a new card. That’s why the trend now is to link auto debits to bank accounts.
Switching bank accounts can feel overwhelming because of all the people you have to notify. However, the upside is that you get to take stock of all the recurring charges you may have forgotten about and decide if those services are still worth paying for. I’ll bet you’d find at least two you’re happy to part with.
4. You moved and your bank isn’t in your new town
Whether you had an account with a community bank or a bigger bank that doesn’t have branches in all 50 states, a major move can require a new checking account even if you were happy with your old bank.
Before you open that new account, though, take the opportunity to shop around for a bank with the lowest fees, widest variety of financial products, and best customer service. Some banks will give preferential treatment to existing customers who want to add other accounts.
For example, when my husband and I applied for a mortgage with the bank we already had a checking account with, they were willing to count our freelance earnings toward our total income. I can’t say for sure that they did so because we were already account holders, but I don’t think every bank would approve of freelancing.
Of course, your priorities will depend on your situation. A credit union with low fees but limited product offerings might be a better deal for someone who isn’t looking for more than a basic checking and/or savings account. Plus you’ll avoid the dreaded upsell.
5. You need a larger ATM network
Perhaps big banks are not your problem—you need a bank with a bigger ATM network because you travel a lot. Paying ATM fees is the easiest way to burn money and yet no one wants to waste a lot of time looking for their bank’s ATM. In this case you might want to switch to one of the biggest banks like JP Morgan Chase or Bank of America, which both own more than 10,000 ATMs.
Alternatively, you could look for a bank that doesn’t charge its own ATM fees and reimburses outside fees. My online checking account from Capital One 360 doesn’t charge ATM fees and, while it doesn’t reimburse them, there are enough “no-fee” ATMs near my house to make it easy for me to withdraw cash.
Summary
If your bank keeps raising fees while service and convenience keeps plummeting, it might be time to think about switching to a better bank.
Whatever your grievance, or the life change that’s making you start over, the bottom line is that consumers win when banks compete. If we show them we’re willing to shop around for a better deal, they’ll have more incentive to keep fees low and perks high.
Have you switched banks lately? Tell us your reasons in the comments.
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