The simple banking switch that could save you time and money

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As a general rule, I try to contain any evangelising about personal finance or superannuation to within this column (you lucky things). That being said, I have been known to interrogate my friends about their super allocations (usually after one too many pints), but no one likes someone rambling on about ETFs or debt or whatever when they’re just trying to have a good time.

However, there was once, circa 2018, when this rule went completely out the window. It was peak neobank boom, and I had just decided to switch from my classic, big four bank account to one of the new challengers, with slick branding and a promise to revolutionise banking – two things I’m usually pretty dismissive of.

If you stick with one bank it could end up costing you.Credit: Michael Howard

But the change was like night and day, and I quickly began to pester my friends, telling them to do the same, to the point where many asked if I was getting some sort of kickback from the company (I wasn’t).

What’s the problem?

In the end many of them caved, found out I was right, and I received some sweet, sweet vindication. But for many of us, this is an unthinkable move, with a recent survey from Finder revealing 51 per cent of adults are still with the same bank they started out with.

This might sound like a bit of a “so what” statistic, but imagine if you were still driving the same car you bought at 16? Or still working in the same part-time job? We’re used to changing and moving on to the next best thing when the opportunity arises, but for some reason, this approach doesn’t apply to our bank accounts.

What you can do about it

So if you’re thinking about switching, or – perhaps more importantly – have never thought about switching, read on:

• Why do it? When you stick with one service provider for a long time, you start to pay something known in the biz as a “loyalty tax”. This can be more literal, like when lenders offer new customers better rates than their existing ones, or more intangible, like a business not being incentivised to innovate or update their offerings because they’ve got a big bunch of loyal users that would never leave them. “Even though you might feel loyal to your bank, staying put isn’t always the best choice for your savings,” Alison Banney, personal finance expert at Finder says. “You’re not rewarded for being loyal to your bank. In fact, it’s quite the opposite – you’re often rewarded by leaving and switching to a new bank.” The biggest reward for switching, in my opinion, is purely about your experience. Most of us bank through our phones, so having an app that works and does things such as notify you of upcoming bills, or lets you automatically split your salary into savings, can be a huge improvement on your banking experience. Have a look around at what the big banks and other smaller challengers are offering – you might be surprised what sort of features you can get in a banking app these days.

• How do you do it? Once you’ve decided where you’ll switch to, it’s a simple process of re-establishing your savers and transferring your funds across. Then comes the relatively arduous process of updating your details for things such as your salary and other regular payments, and direct debits for bills, etc. Take the time to be thorough: “Make sure you check your last few months of statements for any automatic debits or transfers, and move them over to your new account,” financial counsellor Victoria Vivente says (this is also a great time to ditch any subscriptions you don’t need). You’ll also need to change your details with the ATO and Medicare, so you can still get your tax returns and rebates, along with informing any family and friends who may send you money regularly. One thing that makes this easier is that your PayID can only be linked to one account, but to transfer it, you may need to reach out to your current bank and request it be put into transfer mode so you can register it with your new bank.
• Should I keep my old account? Once you make the switch, it might feel a bit weird keeping an orphaned bank account, so it can make sense to close it. However, you’ll probably want to keep your old one open for a few months to pick up any direct debits you might have missed, and definitely wait until you get your new card in the mail, Vivente warns, or you can risk yourself being left without access to either account. In the long term, it’s likely advisable to close the account. Even though most banks don’t impose monthly fees, a dormant account can still be overdrawn by a rogue withdrawal. And don’t worry about money being accidentally sent into the ether if you do close your account: transactions sent to invalid accounts are automatically reversed after 2-3 days.

Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.