Finding a new bank may allow you to take advantage of a slew of new benefits, but be sure to consider the potential downsides to make sure it's the best choice for you right now. For instance, a new bank or credit union might charge additional fees, interest rates may disappoint or customer service may be lacking. Here are five reasons why you may want to stick with your current bank.
1. There Are No Branches Nearby
If walking into a bank or credit union and interacting with employees is important to you, it's essential to have a branch nearby. You chose your current bank for a reason, and that may be because there are several branches within a short distance of where you live.
Despite the growing convenience of mobile and online banking, there are still advantages to brick-and-mortar banks and credit unions. For example, if you have a problem or concern, it can often be easier to reach out to a bank employee in person. If you need to refinance your mortgage, sitting down with a loan officer can provide the answers you need to make an informed decision. If you want to send a wire transfer, buy a cashier's check or cash in a large jug of pennies, most physical banks can do all this for you.
2. Your Existing Bank May Match Competing Rates
If rates are better at a credit union, online bank or large bank across town, you may want to see if you can get a better deal at your existing bank before moving your bank accounts.
Bank loyalty can often work to your benefit. If you're a long-time customer, you may be eligible to earn a higher annual percentage yield (APY) on your savings or get a lower interest rate on a loan. And because banks compete for your business, they may take your request more seriously if you've been a good customer for years or have multiple accounts in the bank.
3. You Can't Meet Account Requirements at a New Bank
One of the top reasons unbanked and underbanked households do not have a bank account is that they don't have enough money to meet the minimum balance requirements, according to a 2021 report by the Federal Deposit Insurance Corporation (FDIC). These minimum amounts can vary between financial institutions and also on the type of account.
For example, you might be charged a fee if a bank requires a minimum daily balance of $200 to keep a savings account open and you fall below that amount. In some instances, a bank will require you keep a minimum balance in your account to qualify for certain benefits, like a higher APY on your savings account. If the bank down the street has high minimum balance requirements, it may pay to stay where you are.
4. There Are More Fees
Bank fees are common. Some banks charge more fees than others, but if you meet certain requirements, you may pay low or no fees. Some banks and credit unions charge monthly maintenance or service fees just to keep your accounts open. You may be charged a fee if you use an out-of-network ATM. If you don't keep enough money in your account to cover all of your transactions, your bank may charge an overdraft fee, and many overdraft fees are in the $30 range.
If you currently have an account with low or no fees, or your bank waives or reimburses out-of-network ATM and overdraft fees, it doesn't really make sense to switch to another bank that charges those fees.
5. Switching Banks Can Be Time-Consuming
Switching banks can take time. First, you have to do your research to find a new bank that meets all your needs: offers comparable interest rates, charges few or no fees, is conveniently located and more. You also have to open your new accounts and remember to transfer automatic bill payments and deposits, recurring transfers and subscription payments, as well as close your old accounts. Transferring to a new bank can be challenging if you have a busy schedule.
The Bottom Line
Switching to a new bank doesn't always make sense. If your bank doesn't charge high fees, you've built lasting relationships with bankers, the rates you're currently getting are comparable or you just can't meet the requirements at the bank across town, you may want to stay put.
Although your credit score doesn't typically influence whether you can open an account at a new bank, it may impact the rates and terms you qualify for on personal and car loans and mortgages. Building your credit and maintaining a good credit score can help show off your finances in the best possible way, now and into the future.