Whether you’ve become disenfranchised with your financial institution or think you could be getting a better deal elsewhere, it is generally a good idea to compare your options before making a decision. The truth is switching your savings or transaction accounts to a new provider is generally easier in some ways than it was a few years ago.
This is due to the implementation of a Federal Government program in 2012 to ensure banks played a more active role in helping customers interested in switching. If you’re looking at changing banks, consider following these five steps:
- Compare your current bank with others
- Open the new account
- Compile a list of your direct debits
- Transfer your direct debits
- Transfer remaining funds and close your old account
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1. Compare your current bank with others
There are a number of reasons why a new everyday or savings account could potentially be a better fit for you. Two key things to look for in a savings account are low fees (or preferably no fees) and a higher interest rate. There are also some other key things to consider, including:
- Any requirements necessary to secure a bonus interest rate if one applies
- Access to branches or ATMs
- Online functionality or app usability
- Customer service
- The ability to link your accounts with other products.
If you’re looking for a new savings or transaction account, the following tables represent options that might be worth considering.
Compare transaction accounts
The following table displays a snapshot of transaction accounts on Canstar’s database with links to providers’ websites, sorted by Star Rating (highest to lowest) then by provider name (alphabetically). The results and Star Ratings shown are based on a high transactor (35+ transactions a month) in NSW.
Compare savings accounts
The following table displays a snapshot of savings accounts on Canstar’s database with links to providers’ websites, sorted by the total interest rate (highest to lowest). The results and Star Ratings shown are based on a regular saver in NSW with $10,000 in current savings.
For a better look at what makes a good savings or transaction account, check out our most recent Everyday Banking Award Star Ratings research.
If you decide it’s in your best interest to switch and you’ve found the right bank account, it’s time to open it!
2. Open the new account
If you have internet access, in some instances you can open a new savings or transaction account in as little as 10 minutes by visiting the provider’s website and clicking the relevant link. While it will vary from provider to provider, most online signup processes require you to enter a few personal details including your name, address, contact information and proof of identification (i.e a driver’s licence). Sometimes you may need to head into the local branch to confirm your identity.
If you have an option to download the relevant app on your smartphone, this can make the signup process faster.
Keep in mind if you want a separate savings and transaction account, you’ll have to open both, and it is not mandatory to have the two accounts with the same financial institution.
You will often receive your debit card for your new transaction account within a few days. You will need to activate this card before you can use it and this may be completed with a phone call, online or in-app depending on the options provided by the institution.
As always, ensure you read the terms and conditions of your new account before you open it.
Canstar tip: some bank accounts require you to deposit money in each account before it becomes active. Transfer a small amount of money over from your current account so you can move onto step three. This usually takes two to three business days.
3. Get a list of your direct debits
This step can make the whole process of transferring accounts much easier and can help you avoid missing payments down the line. If you ask your new bank to help you switch, they will likely be able to contact your old bank for you and get a complete list of direct debits (regular payments you make) and credits (regular payments you receive, such as salary) over the past 13 months.
Alternatively, you can contact your existing bank and ask them to give you the list yourself, but you may need to prepare for a sales talk as they could try to convince you to stay. The following are some examples of what will not show up on the list:
- Pay anyone transactions (such as one-off rent payments or bills)
- BPAY payments
Getting this list can be an important step, as is setting up the new direct debits. Businesses who regularly make direct debit deductions, such as your gym or insurance provider, won’t be aware of your changed details without you notifying them. If they go to charge your normal payment from your old bank account and it is dishonoured because there’s no money in your account (or it’s closed) they may charge you default or late fees, and your old financial institution may charge you a fee as well.
4. Transfer your direct debits
Once you have the list of direct debits, you can transfer them to your new bank account. You have two options for this:
- You can do each one manually
- Your bank can do it for you
The latter can be the more convenient option for some, especially if you have a large number of direct debits and credits. For this to happen, you generally have to fill out a form listing the businesses from step three and send it to your new bank. This isn’t always 100% foolproof, however, and there have been instances of people having issues in the past. If you want to be safe, you can confirm with your new bank that each direct debit has been transferred, or visit each site individually and change your payment details.
Don’t forget: you will need to tell your employer about your changed bank details for your pay to be deposited!
5. Transfer remaining funds and close your old account
Now you have set up your direct debits, it’s time to say goodbye to your old account (assuming you don’t need it for anything else). It could be a good idea to leave the account with some money for a month or two to ensure all your direct debits have been transferred (as mentioned above, institutions may charge dishonour fees if attempted transactions are declined). Once you’re sure all the necessary changes have been made for direct debits and you don’t plan to keep the account, you can transfer the remaining funds and close it down. You can’t always close the account online, so you may need to call or walk into a branch.
Why would you consider switching banks?
Banks are constantly looking to offer incentives to remain competitive and attract new customers, so you can find some compelling deals if you’re looking to switch.
In terms of savings accounts, interest rates are generally low compared to what they were some years ago, and this means it is important to compare and find an account that offers you value. Our savings account research found that at the time of writing, 60 accounts offer a conditional bonus rate, which allows you to earn additional interest if you meet certain requirements. The average total rate (which is the base rate plus the conditional rate) based on Canstar’s 2017 research for savings accounts is 1.85%, while 3% is the highest available. Meanwhile, the average total rate for our 5-Star recipients is 2.72%.
If your savings account isn’t close to this figure, it could be time to consider your options.
Interest rates aren’t always as important when it comes to transaction accounts, where money tends to flow in and out on a regular basis, and the fees and charges can be a more relevant factor to consider. We found a number of transaction accounts are ‘fee-free’:
|Monthly account-keeping fees||$0.00||$2.54||$10.00|
|Electronic transaction fees||$0.00||$0.12||$2.00|
|ATM withdrawal fees*||$0.00||$2.51||$4.38|
|Branch deposit fees||$0.00||$0.03||$2.50|
|Over-the-counter transaction fees||$0.00||$0.87||$5.00|
|Overseas ATM withdrawal fee||0.00%||2.60%||5.00%|
|Source: www.canstar.com.au, 27 September 2017.
*ATM withdrawal fee includes the average fee charged by third-party ATM owners.
Out of the 127 transaction accounts we rate:
- 70 have no monthly account-keeping fee
- 28 have no monthly fee as long as you make a single deposit each month
- 47 don’t charge fees for common transaction types, like internet transfers and EFTPOS payments.
A survey Canstar conducted in September 2017 found 79% of Australians weren’t paying fees on their everyday banking accounts, while just over half (56%) of those who were paying fees paid less than $5. Interestingly, 75% of respondents stated they were not satisfied with their interest rate, while a total of 82% were willing to switch if a better offer came up.
If you think you could be getting a better deal, it can be easy to compare to find an account with the right combination of fees, interest and other features. Canstar can help you do just that: