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A bank acquisition has the potential to reshape some of the features of your financial accounts, but it could also make little to no difference for you as a customer.
If your bank is being acquired, it's important to pay attention to communication that may explain any changes that could impact you, so you can determine whether to stay or switch to a different financial institution.
What Is a Bank Acquisition?
When one bank acquires another, it essentially buys the business and takes ownership of both its assets—including your accounts—and liabilities. Once the acquisition is complete, the acquired bank no longer exists as a legal entity, and the acquiring bank maintains its original charter. Bank acquisitions typically occur between a larger bank and a smaller one.
Alternatively, banks may opt to merge instead. In this scenario, the two financial institutions, which are typically similar in terms of size and operations, agree to consolidate their businesses into a new bank with a new charter instead of one buying the other.
In either case, a bank acquisition or merger could have little to no impact on your banking experience and options, or it may result in major changes.
What Can Change When Your Bank Is Acquired?
Whether it's an acquisition or a merger, the new bank may have a vested interest in rocking the boat as little as possible to avoid losing customers. In some cases, customers of the acquired bank may only experience a minor inconvenience.
However, that's not always the case, and depending on the two banks, your account features and experience could change for better or worse. Here are some potential things that can change:
- Minimum balance requirements
- Account fees
- Annual percentage yields (APYs)
- Variable interest rates on loans and credit cards
- Credit card benefits
- Customer service options
- Routing number
Additionally, you may receive a new account number and a new debit or credit card, and you may also need to set up new login credentials for online banking. At any rate, expect to download the acquiring bank's mobile app to access your accounts.
If you have a fixed-rate loan, however, the terms of your loan will not change because they're fixed from the beginning of the loan term.
The good news is that the new bank is required to provide notice when it makes changes to your accounts, so you'll find out before any adjustments actually go into effect. This can give you time to determine whether to stay with the new bank or switch to another.
Should You Switch Banks?
An acquisition or merger may cause enough changes to your account features or experience that it might not be preferable to stay with the new bank. You may consider switching in the following scenarios:
- Your account now has a monthly fee.
- Your APY is getting slashed.
- You don't use the account often and don't want to keep an eye on future communications about changes.
- The new bank's variable interest rates are higher.
- Your credit card benefits are changing, or your fees are increasing.
- The new bank's customer service has poor reviews.
- You've been considering a switch anyway.
There's no right answer for everyone, so it's important to take some time to consider potential changes and what you want in a banking experience. Even if you've been loyal to your original bank for years, it might make sense to shop around and compare other banks to see if you can get features and benefits that better align with your needs and preferences.
How to Shop Around for a New Bank
If you've decided to switch to a new bank after yours is acquired, think about what features are most important to you as you compare your options. For example, online banks tend to offer better benefits, such as higher APYs, lower fees, large ATM networks and even debit card rewards, but they are limiting if you like in-person services or if you regularly use and deposit cash.
On the other hand, traditional banks can provide easy access to in-person service, and they may also offer a much wider range of financial products and services—but they may not provide as much in the way of high-yield accounts and low fees.
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