Changing Banks Is Not So Easy

Back before the turn of the century, banking was simple.  Free checking accounts were everywhere, and the minimum balances were nowhere near what they are now.  ATM access was still totally free if you used your “home” institution’s cash machines, and you didn’t have to worry about monthly ATM/debit card fees.  You didn’t even have a limit to the number of times you could go into the branch and speak with a representative if you needed to.  Now, with the failures and mergers of so many banks, the landscape of personal banking has changed dramatically.  Lots of people threaten to walk away from their current financial institution in search of greener pastures, but the truth is that switching banks is not so easy anymore.

People are still of the mindset that they can get everything they want in a bank at the drop of a hat, all in one neat package: many locations & ease of access to branches; fee-free accounts with no restrictions; free bill pay & personal financial software access; return of cancelled checks.  They are used to having those amenities, so any time they lose one or all all of these features, they panic and scramble for a new source of these benefits, and that is quite understandable: change is difficult for many people.

The problem with changing banks is two-fold:

1. You would have to give up certain benefits in order to get others.  

   You would have to find another bank that offers exactly what you are looking for all under one roof.  That is very rare these days.  Let’s say that you are a long-time account holder of a totally-free checking account (ie: no minimum balance and no cap on the number of transactions you can make) and your bank no longer offers that type of account. Then they implement a monthly fee for having an ATM/debit card, which you strenuously object to paying.  You have the option to give up the card and save the monthly fee or you can leave.  If you leave because of the fee, you may be able to find the account you are looking for at, say a local credit union, but then you may be giving up the ease of access since most credit unions don’t have a large number of branches (and this is especially difficult if you travel often).  Or you may end up with a fee for online bill pay, or limited online options.
    

2. You would have to do a lot of housekeeping.  

   Each and every account that you have lined to your existing account would have to be changed manually to link to the new one.  That means online banks, brokerages, PayPal, credit cards, utility services, cell phone providers, student loan & mortgage providers, anyone to whom you pay with auto payment or online will have to be contacted in some way to be notified.  In some cases, you may have a couple of billing cycles in which you have to pay manually as not all services can be updated immediately.  And, let’s not forget your direct deposits will have to be updated with your employer so you continue to get paid! Then you have to wait until any outstanding checks clear–yes there are still a good many people who continue to write checks to pay bills–before closing out your old account. Plus ordering new checks if your new account doesn’t come with a free order.

By the time you finish factoring in all of the variables, you may end up in a worse position than you started in.  The time that it took researching institutions, then actually switching all of your linked accounts and bills, and even the time and effort it takes to get to the closest branch may each (or all) contribute to an even worse banking relationship and experience going forward.  Even if you ask for other peoples’ opinions, they would have to be taken with a grain of salt as people usually take extreme views (a bad experience will cause someone to rail against one bank while a good experience will cause someone else to rave), and not everyone may have the same needs.  But, if you’ve done your research, and are 100% sure of your decision, then there is no reason for you not to make a switch.

So what if your bank does start charging for certain things that they never did before, or changing some of their service policies, are you going to leave them?  Would you just accept the changes and stay?  Do you believe in loyalty when it comes to a banking relationship?

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