How you can easily switch banks and make significant savings

UNHAPPY customers left outraged by the banks’ bad behaviour exposed in the royal commission should consider ditching their financial institutions. This is how easy it is.

UNHAPPY customers left outraged by the banks’ bad behaviour exposed in the Royal Commission should consider ditching and switching their financial institutions, experts say.

Latest Galaxy research commissioned by the Australian Banking Association found more than three million Australians switched banks in the three years to September 2017.

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Banks have come under intense scrutiny in the financial services Royal Commission.

Financial comparison website Mozo’s spokeswoman Kirsty Lamont said despite many customers thinking switching is all too hard, it can be relatively painless.

“Many banking customers are so disappointed with their banks right now and there’s a real loss of trust with banking institutions,’’ she said.

Here’s how you can switch your main banking products.

DAILY TRANSACTION ACCOUNT

A transaction account is the main product banks use to snaffle customers so from here they can get them to sign up to other accounts.

The “tick ‘n’ flick” program allows a customer’s new bank to all the dirty work for them.

With the customer’s permission their new bank asks their old bank for a list of all debits and credits made in the past 13 months and from there customers can choose which ones they want to move across and the bank does the rest for them.

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Switching banks is possible but it can take a bit of work for customers.

But if customers have recurring payments that use their debit card number instead of their BSB and account number they will need to manually move these over themselves.

“Pay anyone” transactions including bills do not automatically move over nor will BPAY payments and again these need to be manually moved across.

There’s stacks of fee-free day-to-day accounts available so if you are paying fees you are simply wasting money.

CREDIT CARD

This is one of the toughest products to move — customers have to manually switch all the debits across from their old card to their new card themselves, Ms Lamont said.

“You will need to call up the companies that you have direct debits established with and inform them of your new credit card details,’’ she said.

“You will need to provide your new credit card number, expiry date and the verification code.”

Credit cards can sting customers with interest rates up to 20 per cent.

Credit card interest rates range anywhere from 7.99 per cent to above 20 per cent.

And annual fees can quickly mount up, ranging from zero into hundreds of dollars per year.

The Customer Owned Banking Association’s chief executive officer, Michael Lawrence, said switching is often worth it though, if you can sign up to cheaper products.

“We all know there’s paperwork involved and switching will require some effort, but a bit of effort to save thousands is well worth it,’’ he said.

HOME LOANS

Ask for a key facts sheet from your new lender so you can compare all your fees and charges with your existing bank.

The catch with moving home loans is there are often fees and charges involved so this is where customers can get stung.

Ms Lamont said “the new lender will do most of the leg work for you from the switching to transferring over any automatic payments.”

All home loan customers should be aiming for an interest rate with a “3” in front and again watch out that you don’t get pinged by hefty annual fees especially on accounts that have extra facilities such as offset accounts.

The ABA’s executive director of consumer policy, Christine Cupitt, suggests for those considering switching to firstly “give your current bank a call and see what deals they can offer you to better meet your needs.”

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@sophieelsworth