Banks have been in the news lately, giving the gossip mill plenty to churn over in the coming months. However, many people feel personally unaffected by the news and are unlikely to scrutinise their relationships with their banks (and rightly so – investment scandals very rarely filter down into retail departments, but that doesn’t mean you shouldn’t keep an eye on what your bank is doing).
Nevertheless, it may be a good time to ask whether you’re satisfied with your bank’s services. This isn’t something you undertake lightly – particularly as changing banks involves plenty of paperwork and significant personal inconvenience during the changeover; it’s not something you decide to do on the spur of the moment.
Take John Smith, for example. His parents, Mr and Mrs Smith, enrolled him at his bank during his childhood and he has faithfully received the same services for 40-plus years. While John’s apathy is positive from the bank’s perspective, he isn’t receiving the most competitive prices on the market – simply because he isn’t looking for them.
According to comparison sites, there is a 3 per cent difference between the top and bottom savings accounts on the market, while other financial products, such as loans and mortgages, also come with varying prices. Have a look at savings account at HSBC bank to find an example of competitive rates.
Some of the biggest differences in costs are for things like interest rates, overdraft and default penalties and service charges, all of which can add up to significant costs, particularly for account holders who have several accounts with the same provider. Ensure you’re aware of the terms and conditions before you sign on the dotted line to take out an account.
One reason customers hesitate to switch their bank is the threat of paperwork, which can delay access to their accounts; no one wants to be stranded without access to their money for any amount of time. However, banks are improving their services to allow for changeovers, while customers can always keep their old accounts open in the interim.
Of course, one of the most important things to do before closing an old account and opening a new one is to check the charges that are involved (for example, cancelling a home loan re-payment. Try to get all the information about the accounts up front so you know what fees you will be required to pay before you transfer money to your new account. Make sure you leave enough money in your old account to cover any uncleared payments.
It’s also important to compare services and facilities in the marketplace and ensure that what appear to be better services and facilities are actually better than what you currently get. Keep these things in mind before you prepare to sign up for a new bank account, and ensure you’re getting the deal that suits your personal finance needs.