Most adults commonly have one or more accounts at a credit union or bank. You may have had your account with the same financial institution for a long time and not have given much thought to switching. But the truth is that there are some good reasons to move accounts, and doing so could save you money.
At Leaders Credit Union, we work closely with our members to champion their financial goals and help them make the most of their money. Many of our members come to us because they decide to move their financial accounts to a credit union. So, with that in mind, here are six reasons to move accounts, plus our how-to guide to make the process as stress-free and straightforward as possible.
6 Reasons Why You Should Switch Bank Accounts
There are some good reasons to consider switching your bank account from one financial institution to another. To help you understand why and when you might want to switch, here are six of the most common reasons to consider doing so.
#1: Fees Are Too High
The first reason for switching bank accounts is also the most obvious one. If you’re paying fees that are high, or if there are hidden fees deducted from your account every month, then it may be time to consider finding another financial institution to entrust with your money.
Some financial institutions charge monthly fees for checking accounts or savings accounts. While these fees may sometimes be tied to your balance—or have transactional conditions—you may still find that you can get a better deal elsewhere.
#2: Interest Rates Are Too Low
Most financial institutions pay some interest on savings accounts and some may even pay a small amount of interest on your checking account balance. If you research and find out that your bank is paying less than other financial institutions in your area, you might consider moving your money to a place where it can earn a larger return than it is now.
Credit unions, including Leaders Credit Union, pay their members dividends and interest are typically higher than other financial institutions because credit unions are member-owned. If you want to put your money to work for you, then switching to a credit union makes sense.
#3: Customer Service is Not Good Enough
When it comes to managing your money, the importance of quality customer service can’t be overstated. If you have questions or concerns, you want to be sure that you can walk into your local branch, call a customer service number, or use live chat on a website or app to get the assistance you need.
One benefit of smaller institutions and credit unions can be more personal and accessible customer service. If you’re not getting the help you need with your current financial institution, it may be time to move it to someplace where service is a priority.
#4: Better Online Services & Apps
Online banking services have become increasingly important to consumers, who expect to be able to make deposits, transfer funds, pay bills, and get information about their accounts online or via a mobile app at any time of day or night.
While most banks and credit unions have moved to embrace online and mobile services, some have better options than others. If you want online services that your current financial institution doesn’t offer, it might make sense to move your account to an institution that has the robust services you need.
#5: Your Life Circumstances Have Changed
One of the most common reasons people move bank accounts is because their life circumstances have changed. Here are some examples:
- They have moved to a new location and want to have their money in a local credit union or bank.
- They have changed jobs and their existing job qualifies them for membership in a credit union.
- They have taken the next step in their relationship and want to open a joint bank account with someone else.
- They are weary of dealing with multiple financial institutions and want all their money in the same place.
Switching banks in one of these circumstances makes a lot of sense because it can minimize stress and make your money more accessible than it would be if you stayed where you are.
#6: Lack of ATMs and Branches
Just as online and mobile services are important, so is having a local presence. If you bank with an institution that doesn’t have enough ATMs or branches in your area, it can cost you time and money.
Paying foreign ATM fees or driving for miles to find a service branch may be reason enough to break up with your current bank and open an account elsewhere.
How to Switch Bank Accounts
The prospect of switching bank accounts may feel daunting, but it’s not as complicated as you might think—and it doesn’t need to be stressful. Here are the steps you’ll need to follow:
- Research financial institutions to find the one that best meets your needs. The first step is to research local credit unions and banks and find one that suits your needs. As a reminder, you’ll need to meet the membership requirements if you opt for a credit union account.
- Open and fund your new bank account. You’ll need your driver’s license (or another government-issued ID such as a passport) and your Social Security number to open a new account. Visit their website to see all the opening requirements.
- Leave your old account open for now. You don’t want to risk having checks bounce or automatic payments fail, so don’t rush to close your old account until you’re sure you’ve taken care of everything.
- Switch your direct deposits. If you have your paycheck deposited directly into your bank account, you’ll need to go to your employer’s human resources or payroll department and provide them with a voided check from your new account to switch your direct deposit.
- Switch your automated bill payments. Most of us have bills we pay automatically from our banks, whether we’re using electronic checks or debit cards. Use your old bank account statements to gather information and make sure to switch all payments to your new account.
- Update your checking account information as needed. For example, if you have a PayPal or Venmo account where you linked your old checking account, you’ll need to update that information with your new account.
- Wait for all checks written against your old account to clear. Review your checkbook and balance your old account by marking off any checks that have cleared. If checks are still uncashed, continue to leave your account open until they clear.
- If you have a safe deposit box at your old bank, empty it. If your intention is to consolidate your finances with one institution, you’ll also need to empty your safe deposit box and close it, so you aren’t charged any additional fees.
- Close your old account. After you’re sure everything has cleared and you’ve made all necessary updates, you can contact your old bank to close your account. While you can probably make an electronic transfer between accounts, you might be better off asking your old bank to cut you a check. That way, if there’s a minimum balance requirement, you’ll avoid incurring any additional fees.
Following these steps will help you close your old bank account without unnecessary stress or difficulty.
Does Switching Bank Accounts Affect Your Credit Score?
One of the questions we are asked most frequently is whether switching bank accounts will affect your credit score. It’s a good question to ask because many financial transactions do impact your FICO® score.
The good news is that if you follow the steps we’ve listed above, moving your bank account from one institution to another should not impact your credit score. Most financial institutions do not typically require a hard credit check when someone opens an account, so you won’t get a temporary dip in your score the way you would if you applied for a credit card or a loan.
The most likely issue that could result in a dip in your score would be failing to update automatic bill payments and then, ignoring prompts and reminders to update your bank information. After you switch accounts, it’s essential to monitor your email and texts and take immediate action if you get any notification about a payment not going through. In most cases, it will take only a few minutes to update your bank information and that should be enough to avoid any negative impact on your credit score.
Switch Your Account to Leaders Credit Union Today
If you’re not happy with your current bank, it may be time to find a new one—particularly if you’re paying fees you don’t need to pay, or you’re dissatisfied with customer service. The six reasons we’ve listed here can help you to understand whether it’s time to make a switch.
Are you in search of a new financial institution with competitive rates and excellent customer service? We hope you’ll consider Leaders Credit Union! We encourage you to read more about our membership benefits and open an account today.