Many customers are frustrated with their banks and would like to move to a different institution, but are daunted by the administrative process.
We outline the factors you should consider before you take the plunge, and how to make the switch, should you choose to go ahead.
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Why switch to another bank?
Although many consumers complain about their banks, few make a change because of the effort involved and “fear of the unknown”, says Christine Wu, managing executive for consumer products at Absa.
Instead of completely cutting ties with their former bank, a lot of consumers “flirt” with other banks – having a second or even third account with a different institution, despite the costs involved.
This, Wu notes, can also prevent consumers from obtaining optimal value from any of their accounts. “A lot of the value comes from using your primary account regularly and responsibly, and receiving rewards for doing so,” she points out.
A spokesperson at Capitec Bank notes that the tipping point is usually when the benefits of switching to another bank outweigh the effort of doing so. “People often consider switching during major life events – for example, if they relocate, or if their financial circumstances or credit requirements change.
“However, the ideal time to switch is when you’ve evaluated your financial needs and found a bank that’s better aligned with them,” the spokesperson says.
Is a move in your best interest?
It’s important to do your homework before switching, as moving banks may not be the best course of action for you. Sometimes, simply switching to another account can resolve a cost issue and unlock benefits.
“Value for money isn’t always about lower bank fees. For example, if you reach a higher tier on your account, you can anticipate greater rewards,” Wu notes.
Maureen Uluma, head of product development for transactional banking at Absa Everyday Banking, cautions that the decision to move banks may affect not only the client, but also their spouse and children. These family members may be paying lower fees, or none at all, because of their relationship with the primary account holder.
How to make a switch
If you’re still determined to switch, you must provide your new bank with the information needed to transfer your debit orders.
“The time required to complete the switching process largely depends on when a client is paid, as salaries and debit orders typically have an administrative cut-off date,” says the Capitec spokesperson.
“Start the switching process after your debit orders have gone off, or your salary could be paid into the wrong account,” Wu advises. Banks can’t change the date of a debit order, because it is a contract between the client and a third party, she adds.
Switching requests are usually completed within seven days, but it can take longer because third parties will need to update your debit order banking details.
To avoid any hitches, keep your existing bank account open until the switch has been successfully concluded. “Make sure there’s sufficient money in the account to cover existing debit orders and avoid penalty fees,” warns Wu.
Don’t forget to transfer any instructions for recurring payments, stop orders, or card-based payments for services such as Netflix and Google, recommends the Capitec spokesperson.
Things to consider beforehand
Before making a switch, be sure to consider the following tips:
- Research and compare different banks’ offerings, including their charges, benefits, and rewards, the convenience of their branch locations and ATMs, and the quality of their digital services.
- Assess the level of service different banks offer, and their reputation for service delivery.
- Evaluate the banks’ financial stability and standing.
Make the move only if you’re sure the new institution will be the best fit to help you reach your financial and lifestyle goals.
Tip: Find out if you qualify for a personal loan today.