How Do You Know When It’s Time to Switch Banks?

By Paul Sisolak
September 12, 2017

You and your bank have been together for a long time. Things used to be lucrative and exciting between the both of you, but lately, you get the feeling that it’s just not working out anymore.

In fact, it might be time to break up with your bank.

There could be a million reasons why it’s time to go your separate ways. And, like many relationships, it’s hard to make the decision to seek another bank. Nonetheless, deep down inside, you know you’re not getting your money’s worth anymore.

So, if you are considering that now is the time to switch banks and open a new free bank account, take a look at 5 top reasons why you might want to do so.

1. You’re done paying bank fees

A few bucks in occasional bank fees might not bother you, but if you’ve noticed your fees creeping up regularly, it might be time to start looking elsewhere to bank.

“There are plenty of good reasons to consider switching banks,” says David Bakke of For one thing, if the fees and charges at your current bank are simply too high compared to the competition, it might be time for a change, he says.

Fees you may have seen lately may include overdraft and nonsufficient funds fees (which can cost upwards of $30 per incident), ATM fees, and monthly checking/savings account fees. If you bank at a brick-and-mortar bank, you may even pay teller fees.

While you may be able to negotiate with your bank to waive certain fees once in awhile, don’t expect to make a habit of it. Banks often levy fees on customers to cover overhead costs and other operating expenses. If you’re sick of paying for services that you can find free of charge, you may be better served by another bank.

What to look for in a new bank account: Some fees are inevitable, so look for a bank account that charges the nominal fees you can live with, and pass on the rest. You can also switch to an online bank account that does not charge fees, like Chime.

2. Interest rates are too high (or too low)

Low-interest rates are great on a bank loan, and high-interest rates are great for earning money on a deposit account. But, when this is the other way around, it’s a sign that your bank isn’t the right fit.

Before giving up on your bank, you can first try to negotiate for better rates. For example, can your bank lower the interest on your car loan or your credit card, or raise the rate on your interest-bearing account? If not, seek out a financial provider who can. Laura Hall, a marketing executive at Shiply, did just that, with some added incentive.

“I switched banks a couple of years ago because I was looking for a savings account that would give me a high interest (rate),” she says. “My previous bank wasn’t offering anything very exciting, so I moved to (another bank) which was offering a regular savers account that offered great interest – if you didn’t take any money back out within one year. They also offered $100 to switch, so it was a win-win for me.”

Evan Tarver, a business and investments writer, had been brand loyal to his long-time bank even though interest rates were terrible. After looking around, he found another bank that gave him what he needed.

“I quickly switched and have been earning 1.15% on my idle cash ever since, which is about the highest you can get. If you’re thinking about switching banks, you really need to shop for the (best) rates on savings accounts and high-yield checking accounts,” says Tarver.

What to look for in a new bank account: Just like you did with fees, first try negotiating with your bank to adjust your interest rates. If your bank won’t budge on rates, a new bank account may be in your future.

3. Your bank has poor customer service

More than anything else, if customer service is dismal, it may be time to say bye-bye to your bank.

“If the level of customer service has dropped off where you currently bank, that would be another valid reason (to switch),” says Bakke at MoneyCrashers.

How can you tell that the service is getting worse? Perhaps the tellers or banking associates at your walk-in location are consistently rude to you or unconcerned about your needs. Or, perhaps a real person is never available on your bank’s phone helpline. And, here’s a biggie: if your account has been compromised and your bank dropped the ball on resolving the issue, well, that’s likely the last draw.

What to look for in a new bank account: Customer service should be an instrumental part of your banking experience. Before making the switch, you might want to first talk to a customer service rep or branch manager at your current bank. They may try to improve your experience and offer you a financial incentive to stay. Failing that, shop around for better options.

4. You have different career/life/banking goals

Sometimes people simply grow apart. The same goes for you and your bank.

For instance, you may have a nomadic lifestyle and love to travel, but your current neighborhood bank doesn’t have a great online platform. A larger bank or a strictly online bank account might accommodate you better.

Or, you may have switched jobs and your existing bank doesn’t have the right infrastructure to handle direct deposits. And, here’s an instance of changing life stages prompting a separation: you just got married and you decide to combine your money with your spouse at his or her bank.

What to look for in a new bank account: In this case, it’s OK to move on and find a bank account you’re more compatible with. Most importantly, examine whether your expectations for a bank account are realistic or not.

5. Your bank is behind on technology

There was a time when you were all about filling out deposit slips and becoming a regular at the teller window. But, if you’ve since embraced mobile banking, and your bank is still stuck in the 20th century, switching banks may be in your best interest.

What to look for in a new bank account: Seek out a bank account with an online interface and app that’s to use for making payments, deposits and transferring money. Some bank accounts even offer budgeting tools to help you track your spending and features to help you save more money.

Chime, for example, features an Automatic Savings program which helps you save money with every transaction you make on your Chime Visa Debit Card. Each time you make a purchase or pay a bill, Chime rounds up the transaction to the nearest dollar and transfers that amount from your Spending to your Savings account.

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Paul Sisolak is a freelance journalist and writer whose personal finance articles on saving money, getting out of debt, improving credit and a host of other diverse, wide-ranging topics. His work has been featured on Huffington Post, U.S. News & World Report, Business Insider, Credit Karma, Credit Sesame, Policy Genius, and the Nasdaq blog, among other publications and websites.

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