Switching banks – Is it worth it?

Sometimes it is wise to be switching banks

Customers are changing their favorite brands when they feel disappointed or when another brand is offering higher satisfaction. Thus the pursuit for higher satisfaction is resulting in customers seeking new products and/or new companies. This possibility is offered by the fact that there is not much of a hassle involved in switching between physical products. Consider what you did when you wanted to change your favorite chocolate, or juice, or whatever else that you have changed. Was it time-consuming? Did it cost you anything? Did you have problems finding another product that is similar or even better? Hopefully the answer to all these questions is “No”. Now ask yourself – why don’t you switch to another bank? Are you really satisfied with your bank?  If you are satisfied with your bank then stop reading, otherwise continue. Unlike physical products, switching banks has been a time-consuming process until couple of years ago. Not many people were eager to go through the entire process of changing banks, regardless of their possible dissatisfaction with their banks. For this reasons some banks became a “customer lazy” banks. Meaning that they were focused on attracting new customers, and forgetting about the existing clients.

Nowadays, the technological innovation, increase in awareness of customers regarding their needs, changing customer preferences, as well as the increased competition in banking industry, has changed the process of switching banks. Meaning that it is much easier to change your bank today, and most likely it will become even easier in the future. The constant pursuit for new clients has resulted in banks offering to cover the process of switching banks for you. An additional benefit is that many banks offer some kind of reward (cash reward) in case you switch banks i.e. transfer your paycheck and savings to their bank.

What comes next is to ask – if it is worth switching banks? A single unified answer could not be provided to this question. The reason is that each and every one of us has different perception about the adequacy of his/her bank in relation to his/her needs. Consider for example the need of your grandparents, your parents and your needs (or your children needs). Is there any difference, most probably, one would like to have bank offering technological solutions, another would look for low fees, or face to face communication etc.

Things to consider before switching banks

Although a unified answer could not be provided, there are some general issues that should be considered before changing banks, or from time to time to see if you should switch to another bank. You should consider the following:

  • The fees you are paying for the services – you should always compare the fees of your bank with fees of other banks. Don’t think about these fees as a small amount, because they could be a substantial amount on a yearly base.
  • Consider the interest rates you are paying on the overdraft as well as loans. Go through the interest rates asked by other banks periodically. Maybe could find a cheaper loan to refinance your existing debt, thus saving on the interest rate charge.
  • Consider the interest rates you are receiving on your savings account – a small percentage difference could mean substantial difference in your overall savings amount in the long run.
  • Technology proactive bank – look at the technological solutions and services of your bank in relation to those offered by other banks. Is your bank keeping the pace with new technology? Is your bank offering the newest technological services (mobile banking, online payments, online application, etc.)?
  • Customer service – is your bank offering and adequate customer service? Are you able to resolve any possible disputes in short time? This is the part that many clients do not consider an important. The truth when a problem appears with some transaction, usually it is the most important transaction (Murphy’s Law), thus it will require a solution as fast as possible.

Taking into consideration the above issues, should serve you as a decent base to help you decide if switching banks is worth the effort. But keep in mind that you should not switch banks very often, because it might signal lack of stability in your behavior.

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