Chances are, you’ve never switched banks. A recent study by Bankrate found that Americans enter long-term relationships with their banks, using the same primary checking account for over 14 years on average. But why do so many of us stay loyal to one financial institution? After all, we shop around for everything else — why wouldn’t we consider the best way to keep our money in order? With credit unions and online-only banks continuing to rise in popularity, traditional banks with brick-and-mortar branches are far from the only options we have. If you’re not in love with your bank — and who really is? — it might be time to make a switch. Ahead are some signs that you deserve better from your bank.
Your bank keeps taking your money
Remember the days of free checking accounts? Well, they’re probably not coming back. Nowadays, most big, traditional (as in not online-only) banks expect you to pay them for the great burden of storing your hard-earned money with them — even though they’re making money because of your money. At Bank of America, maintaining a regular checking account costs $14 a month unless you keep a daily minimum checking balance of $1,500 — and that’s daily, not monthly, so it can’t ever fall below $1,500 or you’ll immediately get hit with the fee — or at least $2,000 in a linked regular savings account. For its Advantage Plus checking account, the fee is $12.
Other big banks have maintenance fees too. CitiBank’s monthly charge for a basic checking account is $12 unless you meet their requirements, and Chase charges the same unless you meet slightly different terms. U.S. Bank, for its basic checking account, charges $6.95 a month. Wells Fargo's is $10. Of the most popular traditional banks, only Capital One charges no monthly fee.
Bank fees often hurt people with low incomes most. What if you’re currently living paycheck to paycheck or are unemployed, as so many are during the pandemic? An analysis of checking accounts by JPMorgan Chase found, in fact, that low-income families had an average rainy day fund of $700 in 2019, and it’s likely that many people’s bank accounts are even leaner in 2020. Over a third of women who were receiving the $600 enhanced federal unemployment benefits said that they wouldn’t last a month without it. Many banks did waive some fees in light of COVID-19-related hardship, or offer deferrals on credit card or loan payments, but if you want a minimum balance or maintenance fee waived, you’ll likely have to call your bank’s customer service and have your request approved on a case-by-case basis.
There are many other bank fees that can come your way too, whether it’s out-of-network ATM fees, returned deposit fees, or lesser-known ones like “inactivity” fees. But perhaps the most infamous are overdraft fees. In 2019, banks collected around $11 billion in overdraft fees, often from customers with an average balance of less than $350 in their accounts. Bankrate found that the average overdraft fee right now is $33.36, though some banks charge an overdraft fee multiple times a day if applicable, which can net you well over $100 in charges over a day.
The good news is that online-only banks usually have fewer fees because they save money on not having physical branches. It’s one of their most attractive perks and a big factor in their rising popularity. Usually, one of the most important factors in choosing a bank is the number of branches and ATMs it offers — so that wherever you go in the country, or possibly even overseas, you’ll have easy access to your money. But times have changed, and COVID-19 may have sped up our adoption of digital banking. According to a 2020 J.D. Power survey, 30% of people with bank accounts now use online services only. Online-only banks often partner with ATM networks or reimburse ATM fees so you can still have easy, free ATM access. If you can’t remember the last time you visited a bank branch or needed to sit face-to-face with a teller, digital banking can be an attractive alternative.
You’re always waiting for customer service
In 2018, Consumer Reports found that Chase ranked the highest in customer satisfaction among big banks. But credit unions got the highest ratings overall, with 96% of respondents saying they were satisfied with their credit union. Only 80% of those who banked with the three biggest banks said they were satisfied.
Online-only banks also received high ratings — but maybe it’s still really important to you that you’re able to speak to a bank representative in person, especially if you’ve been finding lately that calling your bank leads to an irritatingly long wait time. Sometimes, the problem is solved quickest by just sitting face-to-face with a representative at your local bank branch.
Your savings account interest rates are too low
In a U.S. News survey on what checking account features people cared most about, interest rates were a lower priority for people compared to things like whether a bank charges fees or whether it offers online banking. Savings account interest rates are much lower than they once were, but you should be aware if your rates are below the average, which is currently around 0.06% APY. A high-yield savings account could offer a rate over 1%. Often, online-only banks offer very competitive interest rates — Varo currently offers 2.80% APY for people with a balance under $10,000, as long as they meet a couple of other criteria. These days, there are also high-yield checking accounts, which often offer a much higher APY than high-yield savings accounts, but they come with a lot of requirements and only apply up to a certain amount — for example, the first $500 of the money in your account. But overall, a bank account isn’t going to net you an immense return in interest compared to a retirement savings account.
The rewards program is lackluster — or nonexistent
Though rewards programs are most commonly associated with credit cards, some banks offer this perk too. Bank of America, for example, has a Preferred Rewards program that customers are eligible for if they average a balance of at least $20,000 in their accounts over a three-month period, which means you get a boost in interest rate for an Advantage Savings account, a 25% bonus on reward points for eligible Bank of America credit cards, and reimbursement for ATM fees, among other perks. There are also higher tiers with bigger bonuses. Other big banks may have something similar, but with higher thresholds — Wells Fargo’s loyalty program kicks in if you have at least $250,000 in your accounts.
You’re worried about getting hacked
If you’re concerned with how safe your money will be in a bank account, chances are there’s little reason to worry. First, your money won’t disappear if a particular bank or credit union fails, because nearly all of them are insured by either the Federal Deposit Insurance Corp or, in the case of credit unions, the National Credit Union Administration, for up to $250,000 at each financial institution you use. The Bauer Financial star ratings are also a trusted system of determining whether a bank is trusted or likely to fail.
But you might also be concerned with online security. It’s possible for online-only bank systems to face errors and go offline, which would mean you’d temporarily not have access to your money, but it’s not a common occurrence. More likely to happen are data breaches. Last year, a hacker managed to expose banking information and social security numbers of over 100 million Capital One customers. Recently, the bank was ordered to pay $80 million in fines for the breach. There’s no definitive metric showing which banks have the best cybersecurity, though you can definitely do some research on which banks have experienced data breaches and how they addressed it. Regardless, one basic feature you can look for is online banking with at least two-factor authentication.
Your bank is shady
Since the 2008 financial crisis, trust in banks have fallen to extreme lows. You might be more or less satisfied with your individual experience with a bank, but find out that it has done or continues to do something unethical. One of the biggest examples in recent memory is the Wells Fargo scandal; for 14 years, the bank had been instructing its employees to commit mass fraud by opening multiple accounts for customers without their consent. Former employees have said that they tried to target the most vulnerable customers — like the elderly and non-English speakers. More recently, in light of the George Floyd protests, Bank of America has come under criticism for its donations to police foundations. There’s probably dirt you can dig up on every bank, and sites like BankTrack help you do just that. JPMorgan Chase, for example, was recently found to be the biggest financer of fossil fuel industries in the world, followed by Wells Fargo, Citibank and Bank of America.
Credit unions, because they’re owned by members and not for-profit, generally have better reputations. In recent years, they’ve become an increasingly popular alternative to traditional banks. Your money will be used to help your local community rather than a corporate interest.