“Why Switching Banks Might Not Be Worth It”

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Why Sticking with Your Current Bank Might Be the Best Choice

Finding a new bank can offer a range of new benefits, but it’s crucial to weigh the potential downsides to ensure it’s the right move for you. A new bank or credit union might impose additional fees, offer less favorable interest rates, or provide subpar customer service. Here are five reasons why you might want to stay with your current bank.

1. Lack of Nearby Branches

If in-person interactions with bank employees are important to you, having a branch nearby is essential. You likely chose your current bank because it has several branches close to where you live. Despite the convenience of mobile and online banking, brick-and-mortar banks and credit unions still offer advantages. For instance, resolving issues or refinancing your mortgage can be easier in person. Physical banks can also handle tasks like wire transfers, cashier’s checks, or cashing in large amounts of coins.

2. Your Bank May Match Competing Rates

If you find better rates at another financial institution, consider asking your current bank to match them before switching. Loyalty can work in your favor, potentially earning you a higher annual percentage yield (APY) on savings or a lower interest rate on loans. Banks often value long-term customers and may offer competitive rates to retain your business.

3. Meeting Account Requirements

According to a 2021 FDIC report, one reason some households are unbanked is the inability to meet minimum balance requirements. These requirements vary by institution and account type. For example, a bank might charge a fee if your savings account balance falls below a certain amount. If a new bank has high minimum balance requirements, it might be better to stay with your current bank.

4. Higher Fees

Bank fees are common, but some banks charge more than others. Monthly maintenance fees, out-of-network ATM fees, and overdraft fees can add up. If your current bank offers low or no fees, or waives certain fees, switching to a bank with higher fees may not make sense.

5. Time-Consuming Process

Switching banks can be time-consuming. You’ll need to research new banks, open new accounts, transfer automatic payments and deposits, and close old accounts. This process can be challenging if you have a busy schedule.

The Bottom Line

Switching banks isn’t always the best option. If your current bank offers low fees, good relationships with bankers, competitive rates, or if you can’t meet the requirements of a new bank, staying put might be the best choice. Your credit score may not affect your ability to open a new account, but it can influence the rates and terms for loans and mortgages.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We’re here to help you make the best financial decisions.

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