There are numerous reasons why switching banks in 2021 makes sense. From dismal interest rates to a lack of features, your current bank might be making your life harder instead of easier. You can find a better one if you prioritize the features and capabilities that matter most to you.
First, you need to think through what your needs are, and decide how to prioritize the most important ones before you start researching. If you do find yourself shopping for a new bank, here are some things to consider.
1. The Perks
Each card offers some different perks. If you’re a frequent ATM user, for example, look for a bank that reimburses ATM charges. If you’re an avid traveler, you’ll want an option that won’t charge a foreign transaction fee for using your debit card overseas. Good news: You can find a bank that will suit all your needs. The following list of things to consider and features to look out for will help you choose the best bank for you:
1. The Type of Account
If you already have accounts open, you should take some time to investigate whether they’re the best options for your financial goals. For example, if your goal is to save money, you should look for a bank with a high-yield savings account. Compared to a traditional savings account, it will enable you to grow your funds faster.
Or perhaps you just got married and want a no-fee joint checking account for paying household expenses. The first step to switching banks is figuring out exactly what you want and then looking for banks that offer those types of accounts.
2. The Type of Financial Institution
A bank isn’t your only option — you can choose between a bank, a banking platform, or a credit union. What are the differences?
A bank typically offers more products and has more physical locations. A banking platform isn’t really a bank at all, but it partners with banks and is able to provide the same kinds of services. A credit union usually offers more personalized credit assistance. That said, credit unions tend not to have as many physical locations as traditional banks do.
Something else to consider is that some banks exist 100% online. If you don’t need a physical bank, a completely digital one might be a good option for you.
Before switching banks, make sure you have a good understanding of your needs. For example, maybe you used a credit union before and thought it was too inaccessible. If you switch to a well-known bank, chances are you’ll never be too far from one of their offices.
3. Good Security
Good security should be one of the most important things to consider when switching banks. Cybercriminals are constantly finding creative ways to gain access to individuals’ sensitive information, such as their bank and credit accounts. According to Cybersixgill, a cyber threat intelligence company, 23 million credit card numbers were stolen during the first half of 2019 alone.
Even if you’re careful with your financial information, you’ll want to ensure your bank is careful too. A good way to assess an institution’s security posture is to look at the features it provides.
For example, you want a bank that uses two-factor or multi-factor authentication. This security measure forces consumers to identify themselves in at least two different ways before being granted access to their account online.
Another feature to look for is real-time notifications. Make sure your bank lets you set up alerts via email or text so you’ll know the second any fraudulent activity is suspected.
4. ATM Rebate Options
ATM fees can add up, especially if you frequently get cash when you’re out and about. You don’t want to have to pay additional fees just to get access to your own money. Unfortunately, if your bank doesn’t reimburse ATM charges, you might have to.
When switching banks, steer clear of those that don’t eliminate ATM charges. Instead, choose one that will either reimburse the entire fee or a certain amount.
To avoid ATM fees altogether, consider a bank that has a large ATM network near you so you can easily withdraw money without charge. Some digital banks leverage the extensive MoneyPass or Visa Plus ATM networks to provide their users fee-free access to cash.
5. Interest Rates
If you’re switching banks, you want to consider their interest rates. If your primary goal is saving, you’ll be looking for high rates. If you expect to be taking out loans, you’ll want low ones. After all, less interest is better than more when it comes to owing money.
Keep in mind, however, that banks that offer lower-interest loans may make up the difference with application fees or late charges. To find out what a bank’s loan rates are, contact the bank directly. You could check online, but as rates are influenced by your credit score, you’ll get a more accurate answer by contacting a representative directly.
6. Minimal Fees
As mentioned above, some banks charge a bevy of fees, which can really add up over time. From monthly account maintenance fees to foreign transaction fees, you don’t want to have to spend money to use your money.
When shopping for the right bank, take a close look at their fees. If you can’t find a bank with no monthly fee, see whether they’ll waive it if you maintain a minimum balance. Then move on to looking at other charges like overdraft fees and excess transaction fees. Make sure you’re looking at all the costs associated with a bank before making any decision.
7. Mobile Banking Options
Mobile banking was a trend long before the pandemic. But more consumers jumped on board during Covid-19 so they could monitor their money from the safety of home. Chase Bank’s Digital Banking Attitudes Study found that, in 2020, 86.5% of Americans used a mobile device to check their bank balance.
Even with social distancing easing up, nothing beats the convenience of mobile banking apps. Being able to transfer funds, deposit checks, and pay bills from your phone can save you enormous amounts of time.
When choosing a bank, look for an institution that offers a secure banking app with the right kinds of features. For example, if you want to use round-up saving to grow your nest egg, look for that specific feature.
After you figure out the right type of account for your financial goals, research an institution that will help you meet them. Just make sure you’re considering all the relevant factors. By using these tips, you’ll be able to choose a bank that will protect your money while also helping you to conveniently manage it.