When to Avoid Switching Bank Accounts

  • Added:
    Sep 29, 2013
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With the 2013 advent of the seven-day switch policy in the UK, you can, in theory, be fully transitioned from one bank account to the next within the span of one week. However, switching bank accounts is still a relatively big decision that can impact your other finances and doesn’t need to be made lightly. Simply because you can switch from one banking institution to another in just a few short days doesn’t mean that you necessarily should, especially if you have strong ties to the institution that includes other accounts and investments. Here are some reasons to avoid switching bank accounts.


Linked Accounts
If you have a chequing, savings, and mortgage account with the same institution, moving one of your accounts away can disrupt your transfer habits. When accounts with the same institution are linked online, it’s easy to transfer money. If you move money to another institution, it’s not quite as simple to get money from one account to the next. Likewise, if you and your spouse have accounts at the same bank and are able to easily send each other funds because you have linked the accounts – moving to a new bank will mean new hassles when it comes to sharing finances.


Easy Account Management
On top of  losing the ease of transferring money from one account to the next, switching bank accounts also means that you can’t make all of your deposits with the same institutions. This means two trips to two banks to deposit checks and managing your accounting with two separate websites and apps. When you move to a new bank you can’t see all of your account data on the same screen and easily move money around within a few seconds. While it may be possible to send money from one account to a different one with a second bank, the transfer will never be instantaneous.


Fees
If you switch bank accounts at the promise of a free account, bear in mind that hidden charges may await you that your current bank doesn’t have. If you face large fees for deposits over a certain amount of money, for instance, moving to a new bank may not be worth it after all. Similarly, in order to enjoy the same leniency buffer on overdraft situations that you have with your current bank account, you may need to upgrade to a paid chequing account with your new institution. The future penalty fees and charges that you may be subjected to at a new bank must be considered when you weigh out whether or not to switch bank accounts. If they are greater than what your current bank offers, any other savings will slowly be negated.


History
When you have history with a bank you sometimes have more weight to your requests. For instance, if you want to get fees waived or open a new loan with a good interest rate, having a positive history may work in your favour. You can point out your loyalty to the bank when you are asking for a good rate or decrease in fees and they may oblige you to keep you on as a customer. On the other hand, if you don’t have a positive history with a bank simply because you are a very new customer, you may not have the same pull when it comes to getting good benefits out of your accounts. Keep your relationship with the bank in mind, and don’t switch if you have reason to believe that a lengthy relationship with the institution could work in your favour in the near future.


Switching bank accounts is a relatively big decision, especially when you have many bills that are automatically paid out of a current account. While the seven-day switch promises to make the change low stress, you may still need to ensure that all of your creditors have your new bank account information for payments. In addition, you should consider whether or not your new bank will have a convenient number of cash point machines in the right places. If getting cash from your account becomes a very difficult task, then switching bank accounts may not end up feeling like a very smart decision.

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Sam Jones recommends uSwitch.com as a great resource for people looking for more information on wsitching bank accounts


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