Why Sticking with Your Current Bank Might Be the Best Choice

Finding a new bank can offer a range of new benefits, but it’s crucial to weigh the potential downsides to ensure it’s the right decision for you. While a new bank or credit union might seem appealing, additional fees, disappointing interest rates, or subpar customer service could be deal-breakers. Here are five compelling reasons why you might want to stay with your current bank.

No Nearby Branches

If you value walking into a bank or credit union and interacting with employees, having a branch nearby is essential. You likely chose your current bank because it has several branches within a short distance of where you live. Despite the growing convenience of mobile and online banking, brick-and-mortar banks and credit unions still offer significant advantages. For instance, if you encounter a problem or have a concern, it can often be easier to resolve it in person. If you need to refinance your mortgage, sitting down with a loan officer can provide the answers you need to make an informed decision. Physical banks can also handle tasks like wire transfers, cashier’s checks, or cashing in a large jug of pennies.

Your Existing Bank May Match Competing Rates

If you find better rates at a credit union, online bank, or a large bank across town, consider asking your current bank if they can offer a better deal before moving your accounts. Bank loyalty can often work to your advantage. As a long-time customer, you may be eligible for a higher annual percentage yield (APY) on your savings or a lower interest rate on a loan. Banks compete for your business, and they may take your request more seriously if you’ve been a good customer for years or have multiple accounts with them.

Meeting Account Requirements at a New Bank

One of the top reasons unbanked and underbanked households do not have a bank account is the inability to meet minimum balance requirements, according to a 2021 report by the Federal Deposit Insurance Corporation (FDIC). These minimum amounts can vary between financial institutions and account types. For example, you might be charged a fee if a bank requires a minimum daily balance of $200 to keep a savings account open and you fall below that amount. In some cases, a bank will require you to maintain a minimum balance to qualify for certain benefits, like a higher APY on your savings account. If the bank down the street has high minimum balance requirements, it may be more beneficial to stay where you are.

More Fees

Bank fees are common, but some banks charge more than others. If you meet certain requirements, you may pay low or no fees. Some banks and credit unions charge monthly maintenance or service fees just to keep your accounts open. You may also be charged a fee for using an out-of-network ATM. If you don’t keep enough money in your account to cover all your transactions, your bank may charge an overdraft fee, which can often be around $30. If your current account has low or no fees, or your bank waives or reimburses out-of-network ATM and overdraft fees, switching to another bank that charges those fees doesn’t make much sense.

Switching Banks Can Be Time-Consuming

Switching banks can be a time-consuming process. First, you need to research to find a new bank that meets all your needs, such as offering comparable interest rates, charging few or no fees, and being conveniently located. You also have to open your new accounts and remember to transfer automatic bill payments, deposits, recurring transfers, and subscription payments. Additionally, you need to close your old accounts. Transferring to a new bank can be challenging if you have a busy schedule.

The Bottom Line

Switching to a new bank doesn’t always make sense. If your current bank doesn’t charge high fees, you’ve built lasting relationships with bankers, the rates you’re getting are comparable, or you can’t meet the requirements at the bank across town, you may want to stay put. Although your credit score doesn’t typically influence whether you can open an account at a new bank, it may impact the rates and terms you qualify for on personal and car loans and mortgages. Building your credit and maintaining a good credit score can help present your finances in the best possible light, now and into the future.

If you’re considering refinancing your mortgage or need any mortgage services, O1ne Mortgage is here to help. Our team of experts is dedicated to providing you with the best possible service. Call us today at 213-732-3074 to discuss your mortgage needs and find out how we can assist you.