3 Situations When You Should Absolutely Change Banks

by Thursday Bram · 27 comments

Changing your bank can be a major hassle — something that’s rarely worth doing without a very good reason. There are some people who seem to flit from bank to bank, usually in search of elusive high interest rates on savings accounts. But most of us wind up sticking with our banks indefinitely, and that’s not always a good thing.

There are a few situations when making a change is sensible, if not absolutely necessary. At the most basic, if there’s a problem with your bank that is not handled in a way that is satisfactory, take your business elsewhere. Beyond that, there are a few situations that point to changing banks beyond simple problems. Here are a few to consider:

  1. Convenience: If your bank is not convenient, it actually makes sense to change banks. Convenience can vary from not needing to drive out of your way to finding a bank that caters to the type of services you actually need. If you need both a business checking account and a savings account, choose a bank that offers both. If you rarely see a teller but you rely on ATMs, finding a bank that doesn’t charge fees for using them is crucial. The fact of the matter is that we can get stuck in a routine with a bank that really isn’t right for our needs, which can wind up costing us time and money. Being loyal to a bank is all well and good, but not when it costs you more than it benefits you.
  2. Trust: When you hand your money over to a bank, you have to be able to trust the company managing those funds for you. If — for any reason — you don’t feel that you can trust your bank, it’s time to take your business elsewhere. It honestly doesn’t matter if it seems like the bank should be trustworthy. You want to be able to sleep comfortably at night, and it can mean paying a little more for the privilege of banking with a particular institution. Sometimes, it’s the local branch, or even a particular employee that breaks your trust. The reason doesn’t matter. If you aren’t comfortable, then take your money and run.
  3. Stability: These days, the bank that you open your account with could have a very different name on the door every year or so. It can be disconcerting, but it isn’t necessarily a reason to change banks. On the other hand, we’ve lately seen some banks wind up in major trouble. As long as your bank is insured by the FDIC, you don’t have anything worry about financially if something dire happens — but if you can avoid such situations, so much the better. If there’s news that your bank isn’t the most stable out there, considering a move is a good idea. There can be some limitations, of course. If a bank is in real trouble, it may close its doors to avoid a run on the bank. If you check the news about your bank occasionally though, you may be able to move your account before things become drastic.

Don’t keep changing banks all the time, but don’t procrastinate if you already know your bank isn’t right for you either.

When was the last time you switched banks? How was your experience?

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{ read the comments below or add one }

  • Jennifer says:

    I went to an online-only bank over a year ago and overall it’s been great. The only drawback is sending in deposits, so I did keep a local account open and then just do transfers online.

  • Mary says:

    I switched from a bank to a credit union when the bank started charging for savings account deposit slips. When I asked why, they said they couldn’t read customers’ handwriting.

  • Mano says:

    Yes, Definitely, convenience is the most important thing for me. I used to live in the city where I can have an instant access to my bank. But when I moved to another city, I find it hard because it is very far from my bank. Now, I switched to an online banking system which is really easier and convenient for me.

  • Justin @ MoneyIsTheRoot says:

    I think most of these issues are alleviated by using a credit union. I used to have accounts at a couple different banks, but credit unions offer convenience and low fees.

  • Thomas says:

    Great Article, I know that I am commenting on it a bit late, but it is still extremely relevant. When changing banks, its great to know why you are leaving “Bank A,” but for what reasons do you choose “Bank B?” How do you choose? Do you pick another bank or jump ship and join the credit union movement? Knowing this will surely be helpful for consumers looking to switch financial institutions and not get stuck in a similar situation with their new institution. -SpotBanks

  • Nick says:

    After Chase cut my home equality loan for no reason saying I was not trustworthy.I paid it off then asked to reinstate it again they said I was not trustworthy.
    I then paid off my first and again they said I was not trust worthy.
    So chase has lost all my business.
    What happen to those days when you paid back a bank they then trusted you for another loan .
    And last whe the bank was Washington Mutal they had free bathrooms where now all they can say is they can’t let me use them because they don’t trust me.
    Banks never change..

  • Roger says:

    WOW if you want to hear about Banks drop me a line for some fantasist storys to bad they suck.

  • Jane says:

    I started pulling money from my bank account to another account when they started hitting me with all kinds of fees, and my high interest savings account began earning just 0.45%. (Which they failed to inform me about). I found a bank offering 3.5% for the first 6 months, so I transferred my savings account to them last year, and have opened a checking account with them this year. I am closing out the former account (which is with one of the bigger banks, which took over the smaller bank that originally held my funds).

  • heaps! says:

    At one point I took a teller position at a bank. (Not the bank I was actually banking with). I felt like I was pushed to open up an account with the bank which employed me. Though, I didn’t make a complete switch over to the bank of my employment, I opened an account for my paycheck to be deposited to. I would keep track of both accounts throughout my employment. Even after I took a job elsewhere, I kept both accounts. (Having two accounts wasn’t the simplest way to keep track of my finances). I didn’t end up closing my account with the bank I had previously been employed with until I decided to travel. I moved my money over to my original bank because it was easier to stay in contact with them, and online banking was much more reliable while I was overseas.

    Another reason I didn’t want to keep my account my previous employer is because I felt uncomfortable knowing my previous coworkers could look into my accounts. I felt a bit uneasy about this during my employment, but while I was employed there only a few account managers actually had access (rather than the entire staff).

    I think I would prefer to stay with my original bank for as long as possible. It’s big enough that finding an ATM in another city, or state, isn’t a problem. Not to mention, customer service has been exceptional. If I weren’t pleased with the service I was getting I wouldn’t think twice about switching. I think it’s important to trust your bank.



  • Mary Robenson says:

    Thank you very much for sharing this blog. Lately I was very much worried about this bank matters, but i think now i know what should i do. Thanks for sharing.

  • Jeff says:

    I switched about eight years ago after the bank I used for 10 years ( a medium-sized regional bank) got to be impossible to deal with, their employees were suddenly less than friendly and the fees got to be outrageous. So far, no problems with the new bank but I won’t have a problem with “firing” them if they get to be as bad as the other bank. I’ve done this with car and home owners insurance, so I can do this with a bank.
    BTW – to tjc360, that explains the problems I had/have with them.

  • Aerodog says:

    Relying on FDIC Insurance begs the question of WHEN the FDIC will ‘pay off.’ Years ago, I had several thousand dollars ‘insured’ by the Maryland State Insurance vehicle, when the insured Savings and Loan went bust. MSSLIC did eventually pay off, but I lost access to that money for over a YEAR, and they only paid on the principal, not paying off on the year’s worth of interest that was about to come due AND not paying interest for the year that MSSLIC had my money. I lost two year’s interest at CD rates on about $10,000., so please don’t think everything will be ‘fine’ simply because you have FDIC coverage. NEVER have ALL of your money in a single (or several related) entities, and if it looks like trouble is brewing, MOVE YOUR MONEY.

  • tjc360 says:

    Wachovia/Wells Fargo are run by Satan himself.

  • Financial Bondage says:

    I don’t think any bank is all that secure these days… Of course I could be wrong.

  • Martha says:

    Excellent post. Really you explained very well why and when we should change our banks. I learned a lot from your article. Thank you very much for sharing. Please share more in future.

  • CreditShout says:

    I had a problem when I first opened a checking account about five years ago because the bank that I chose kept getting bought out from another chain, which was always an inconvenience because I had to learn all their new policies. I finally switched to a bank that many friends recommended highly and we’ve been together for about two years very happily.

  • M says:

    I always suggest a credit union over a bank. My credit union is really customer service oriented and it has low rates on credit cards and auto loans. The banks in the area really can’t compete. The one I use is First Financial Federal Credit Union in New Jersey.

    Many people don’t know what a credit union is and I honestly did not know for the longest time. Credit unions are like banks, but better. They don’t pay out stockholders among other things.

    I would really suggest checking out your local Credit Union.

  • Roger says:

    Here’s another reason to switch. Big banks run the US Government to far too great a degree. Transferring money to a smaller local, and healthy, bank or credit union is a way to take away some of their power. Small, perhaps, symbolic, perhaps, real, yes, and it supports a smaller institution which is probably lending locally, which matters. My credit union lets me use ATMs at any credit union in its network, which is huge, for free.

  • heaps! says:

    Most people I know settle with one of the big banks – Citi, Chase, Bank of America, etc. – so there wouldn’t really be much of a reason to switch banks. The only reason I could think of switching from one of those banks would be for a location closer to where you live. Or perhaps a problem with the branch you most frequently go to.

    If however you bank with smaller banks, there would definitely be more reason to switch out. Their interest rates might not be nearly as high and of course there is always the reason on convenience.

    • Matt says:

      The big banks are also the ones who took billions of dollars in TARP funds, paid CEO bonuses of millions of dollars to people who essentially drove their companies into the ground, and basically gambled our money away.

      I don’t think a percentage point of interest is worth the 40% drop in my 401k.

      Risky banking gets higher percentages and risky banking causes our country to enter into a great recession that has the potential of knocking us off the top while other countries like China and India surpass us.

  • Cd Phi says:

    Another situation that can often occur with banks is that you’re not getting the best out of your money. Many people hesitate to change banks because they’ve settled down with their bank and they begin to get too comfortable there that they’re no longer aggressively looking for better interest rates for their savings. That’s money that we’re losing out on by becoming too content with a bank that isn’t offering us their best.

  • MoneyNing says:

    Despite wanting to a few times, I never really “switched” banks either. I did however switch banks when I moved from Hong Kong to Canada and then from Canada to the US, but other than that, I’ve been a loyal customer.

  • marci357 says:

    When my bank would not give me a mortgage as a single woman, (with beautiful credit) after dealing with them for almost 20 years, right after a divorce, yet they would give my ex-husband one…. The clincher here was that the property we had been paying on had been MY property, not his, and I was the one making the payments.

    I pulled every account, savings, and CD I had, and got my mortgage for my new home elsewhere…. The bank was VERY sorry later that they had not bothered to check into the ownership of the previous property loan (in my name) and had NOT listened to my explanation….. especially when I managed to pay off my new mortgage in under 10 years and accumulate a nice chunk of change that did NOT end up in their bank. Their loans to him did not turn out so well.

    To say I was furious with them was an understatement, however, actions speak louder than words. I just pulled everything – waiting for the CD’s to mature tho before I moved them…. but they lost a substantial amount of deposits which they have never recovered from me 🙂

    Revenge is sweet 🙂

    • MoneyNing says:

      Actions speak louder than words. Well put.

      Some lenders are not really reasonable, and I’m glad that you found one that is.

  • CD Rates Blog says:

    I haven’t ever changed banks, but I added a savings account with an online bank that I can push and pull from. Very convenient. I have an HSA with a more local institution, that is the type of account that it is nice to be able to easily get local service.

    My main bank has branches all over the US so really good for traveling. I’ve been contemplating adding another bank that has the deposit-at-home feature, but haven’t done it yet.

    • MoneyNing says:

      If you ever change banks, you should consider the ones that let you withdraw from any ATM. What they usually do is just reimburse you for the charges. My brokerage gave me an ATM card that can do this, and it’s actually quite convenient if I were to need this.

      Then again, I never withdraw cash these days so I haven’t used it in a few years 🙂

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