How to switch banks at a click of a button
Switching banks has never been so easy with this one simple step.
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If you’re unhappy with your current bank account, don’t put up with it. It’s easy to switch banks with this one simple step:
Ask your new bank to help you
The Australian government banking reforms that became active from 1 July 2012 made it very easy to change banks. All you have to do is choose the financial institution you want, whether it be a bank, credit union or building society, fill out one form and the institution will do all the work for you.
The bank will contact all the institutions you have automatic debit and credit arrangements with giving them your new transaction account details.
Once you have shopped around and found the bank you want to work with, ask them to help with the switch. When contacting your new bank for help, the bank will need a 13-month transcript of direct debits and credits from your previous bank.
The 13-month list will be given to you by your new bank so you can choose what debits and credits you would like to transfer over to your new bank account. If you have trouble, just ask your new bank to help you.
The following items will not be included on the 13-month list:
- “Pay anyone” transactions (such as fortnightly cleaner payments or bills).
- BPAY payments.
- Payments that are recurring and where you've given your debit card number.
- Google Pay, Apple Pay
- Monthly fees: $0
- No international transaction fees
- Up to 10 currencies
Closing your old account
Once you've opened your new account, don't forget to close the old one. Although the old account may have no money in it, the bank could still charge you account keeping fees. Close your old account once you have:
- Successfully moved all your debits and credits.
- Collated your list of payments from your old account that include "pay anyone" and BPAY.
- Told every institution about your new card and account numbers.
Closing your old account is a relatively hassle-free process. Normally you will have to visit a branch to close the account.
Things to consider when switching bank accounts
Before you decide to start switching between introductory savings accounts to maximise the interest rate, you need to be aware that there are several disadvantages to this approach. These include:
- Only available for new customers (that is, you've never held the account before)
Another common restriction with introductory rate accounts is that they are only for new customers. This will stop you from switching to a bank with which you already have an account, and will probably also mean that you will eventually run out of honeymoon rate accounts that you are eligible to open. A limit of one account per customer will also usually apply.
- Strict terms and conditions
Many banks impose a range of complex terms and conditions to their introductory bonus savings accounts. One of the most common restrictions is that you need to open another account with the same bank, which usually attracts a monthly fee, in order to qualify for the honeymoon rate. The fees payable on this account can often counteract the benefits of the higher rate. In some cases, the bank may require you to keep a savings account open for a specific time period, which is longer than the introductory period, and closing it early could result in a fee.
- Hidden fees, or fees associated with the linked bank account
You also need to be wary of any hidden fees attached to the new account you open. For example, you may be charged a fee for closing this account, or for making a withdrawal.
- Minimum balance requirements
Another issue you need to consider is whether your introductory bonus savings account has any balance restrictions. For example, as well as requiring a minimum deposit, the account may only apply the bonus rate to balances up to a certain level, usually $250,000.
- Deposit and withdrawal requirements
Some accounts include conditions which you must satisfy in order to earn the maximum interest rate. For example, you may have to deposit a minimum amount each month and not make any withdrawals.
- Remembering to switch
Many Australians simply get sucked in by the dollar signs attached to the introductory rate and then "set and forget". When the bonus rate period ends and the standard variable rate applies, the banks know that a lot of customers simply forget to switch to a new account or simply can't be bothered. Your funds will then only earn interest at the standard variable rate.
- Research required
The terms, conditions and fees that often apply to savings accounts mean that it's not really possible to switch on a whim. Instead, you'll need to put in some hard work to research the restrictions and fees that apply to each account, as getting slugged with an unexpected charge or interest rate cut can hurt your bank balance.
Tips to maximise your savings power
While moving from bank to bank to maximise your savings does have its drawbacks, if you're willing to spend a few hours reading the fine print it will help you build a bigger nest egg. Here are a few more tips to give your balance a boost:
- Consider the standard variable rate. Even though you are switching to take advantage of introductory rates, it's also a good idea to consider the standard rate the account will revert to when the honeymoon period ends. This will ensure that if you forget to switch a few months down the track or can't find another suitable offer, your money will continue to grow at a decent rate.
- Look beyond the "Big Four". To find the best savings account interest rates you will have to be willing to look beyond the big players in Australia's banking industry. Don't be afraid to see what other financial institutions have to offer, even if it means "cheating" on your regular bank.
- Read the fine print. To be a successful rate hopper and avoid any unexpected fees and restrictions, you'll need to be willing to commit a few hours of your time to pore through lengthy terms and conditions documents for different accounts. It's boring, time-consuming work, but the results can be worth it.
- Be strong. Remember that the reason you're switching is to maximise your savings, so don't feel restricted by any sense of loyalty to your bank. Your current bank may even pull out all the stops to encourage you to stay, but unless they're offering a better deal than you can find elsewhere, stick to your guns and look for the best value for your money.
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