5 Reasons Switching Banks May Be Worth It

Many Americans develop a long-term relationship with their bank, often sticking with the same checking account for 19 years and a savings account for nearly as long, according to a Bankrate survey. While bank loyalty might seem like the path of least resistance, staying put could mean missing out on valuable benefits that better fit your financial needs.

By comparing your current bank with alternatives, you might discover options that provide higher interest rates, better digital banking features, more convenient ATM access, and other advantages. Here are five reasons to consider making a switch.

1. Higher APYs on savings

Remaining with your current bank could mean you’re earning significantly less interest than you could be. In fact, most Americans are missing out on the benefits of high-yield savings accounts. Nearly two-thirds of Americans (67 percent) with savings are earning a lower rate than 4 percent, Bankrate’s latest online savings survey found.

“You get the additional interest without sacrificing the safety of federal deposit insurance, or access to the money whenever you need it,” McBride said. “Getting additional return without having to take risk to get it is the only free lunch in finance.”

Competitive yields on savings accounts are often found at online banks, which don’t bear the cost of maintaining branches and can pass along the savings to customers in the form of higher rates.

Check out Bankrate’s best high-yield savings accounts, which currently offer rates above 4 percent APY — up to 40 times higher than the rock-bottom yields offered by many traditional banks.

2. Fewer fees (or no fees)

Another way sticking with your current bank could cost you is if you’re being charged monthly maintenance fees. Some banks waive the fees if you maintain a set minimum balance or receive direct deposit. However, if you’re being charged such service fees, they can add up quickly and may negate any interest you’re earning.

If your account charges monthly fees that aren’t easy for you to avoid, you can possibly save hundreds per year by finding an account that won’t hit you with such fees. Consider these common bank fees that might be draining your account:

• Monthly maintenance fees ($5 to $15 per month)
• Out-of-network ATM fees (average $4.77 per transaction, according to Bankrate research)
• Overdraft fees (average $27.08 per occurrence, according to Bankrate research)
• Paper statement fees ($2 to $5 per statement)
• Wire transfer fees ($15 to $50 per transfer)

Many online banks and some credit unions offer completely fee-free checking accounts with no minimum balance requirements. Bankrate’s list of best checking accounts can help you find options that won’t nickel-and-dime you with fees.

3. Wider branch availability and ATM access

If in-person banking is important to you, consider whether your current bank provides the branch access you need. Many consumers prefer the sense of personal support that comes with visiting a teller to make transactions or ask questions.

Larger national institutions like Chase, Bank of America, and Wells Fargo offer extensive branch networks across the country, while regional banks may provide better coverage in specific areas.

However, if you frequently pay out-of-network ATM fees, consider finding a bank that offers:

A potential downside of choosing a bank with a large branch footprint is that many such institutions tend to pay lower APYs. Consider the hybrid approach: maintain a checking account at a bank with convenient branches while keeping your savings at a higher-yielding online bank.

4. Better digital experience

Not all banking apps and websites are created equal, as some provide a more seamless, user-friendly experience than others. If digital banking is important to you, research what different banks have to offer on the digital front.

Beyond the basics of checking balances, paying bills, and transferring money, today’s best banking apps include features such as:

• Zelle or similar services for instant peer-to-peer payments
• Card security controls (lock/unlock your debit card instantly)
• Automated spending categorization for budgeting
• Credit monitoring services
• Early direct deposit access (get your paycheck up to two days early)
• Automated savings tools that round up purchases or analyze spending patterns

If such perks are not included in your current bank’s app or website, it’s not hard to find a bank that does offer them. Locate a bank’s app on Google Play or Apple’s App Store to see screen shots of what the app looks like as well as user-generated ratings.

5. Values alignment

Some consumers make it a point to put their money into a bank that aligns with their values or faith, or with the causes that are important to them.

Political values: Amalgamated Bank could be an option for consumers with political leanings that are progressive. Known as a bank that serves labor union workers, the bank also supports socially responsible causes.

Faith-based values: AdelFi Credit Union are University Islamic Financial are institutions that have religious affiliations. Kosher Financial Institute is a resource that lists banks and lenders that comply with Jewish law.

Eco-friendly banking: Financial institutions that report taking part in environmentally friendly practices include Forbright Bank, Limelight Bank and Climate First Bank.

Resources for finding a bank that aligns with your values include Mighty Deposits, a website that compiles data on how banks invest their money and who owns them. Another option is the Global Alliance for Banking on Values, whose members include banks that meet certain criteria regarding environmentally friendly and community-first practices.

Additional perks worth considering

If you’re in the market for a new bank, some additional perks to look for include:

Bank account bonuses: Some banks pay sign-up bonuses of $200, $300 or more to new customers who open accounts.

Stellar customer service: Customer service-related perks at banks may include extended phone support hours and live online chat with a representative.

Extended branch hours: If you work in an office all day, you may appreciate a bank with branches that are open outside of normal hours, such as on weeknights or on Sundays.

Swag: While this is no longer often the case, some banks give out free items to new customers. These days, the most you’re likely to receive when opening an account in a branch is a mug or a magnet.

Historically, though, some banks were known for giving out swag that was a step up from a pen or a ruler. For instance, the now-defunct First Republic Bank gave new customers umbrellas bearing the bank’s logo. And Harris Bank, which is now part of BMO Harris Bank, gave new customers a plush toy in the likeness of Hubert, the bank’s lion mascot.

How to search for a new bank

Bankrate offers resources to help you find a bank that meets your specific needs. Start by identifying your banking priorities:

1. Determine what matters most: Higher interest rates? Lower fees? Branch access? Digital features?
2. Research options: Compare banks using Bankrate’s guides to best checking accounts, best savings account rates, and savings calculators.
3. Consider a hybrid approach: You don’t need to keep all your accounts at one bank; many people maintain accounts at both online and traditional banks to maximize benefits.
4. Look into account switching services: Many banks offer switch kits to help transfer direct deposits and automatic payments.

Remember, switching banks doesn’t have to be an all-or-nothing proposition. You might decide it’s smarter to open a new high-yield savings account while keeping your checking account at your current bank, or to open a CD for longer-term savings while maintaining your existing accounts.