Here's When You Know It's Time to Switch Banks

Studies show that Americans are relentlessly busy. The U.S. is the most overworked developed nation in the world. The few hours most of us have left over each week are spent doing exciting things like mowing the lawn, planning meals, and helping the kids out with their homework.

Perhaps one reason people don't switch banks more often is because of the time involved in shopping for a bank that will better meet their needs. Still, if you spot any of these four red flags, it's time to consider a new bank.

1. When fees eat into your balance

If you've grown to believe that fees are a normal part of banking, you're stuck in a mindset that no longer applies. The best banks charge either low fees or no fees at all. Some may charge fees that can be waived as long as certain goals are met. For example, a bank may waive the monthly maintenance fee if you maintain a specific balance in your checking account.

Whether you're still receiving a paper statement or have online access to your monthly statement, look it over to make sure any fees you're paying are legitimate. Let's say your bank charges $2 a month to mail you a paper statement. That's a legitimate fee (and one you can stop paying by checking your monthly statements online instead). Here are some of the other fees banks charge:

• Monthly maintenance fee
• Inactivity fee
• Out-of-network ATM fee
• Overdraft fee
• Nonsufficient funds fee
• Check fees
• Stop payment fee

Once you notice a fee, jot it down. Before making a decision about whether you'd like to bank elsewhere, ask your bank about ways to get rid of fees. As mentioned, the bank may waive the monthly maintenance fee if you maintain a specific balance. You may be able to get rid of overdraft fees by tying your checking account to your savings account and allowing the bank to move money from savings when there's not enough in checking to cover a debit.

If you're still being nickeled and dimed each month, it's time to stop giving your money away and to shop for a new bank account.

2. When customer service is more hassle than help

My husband and I recently opened new checking and savings accounts in the city we moved to. One thing I did not think to check before settling on a nearby credit union was how easy (or difficult) it would be to call with a question. I had no idea how frustrating it would be to attempt to speak with a live person.

Our new credit union has recently switched over to a chatbot to answer caller's questions. It's one of those standard computer programs designed to simulate human conversation -- and frankly, it was both creepy and maddening. None of the prompts the chatbot offered fit my situation, meaning I was forced to listen to the menu of options over and over again. When I asked about speaking with a live agent, I'm pretty sure the chatbot laughed. In any case, I finally gave up.

If you've been with your bank long enough to know that you're probably not going to get anywhere with customer service, it's a legitimate red flag. When it comes to something as essential as your finances, you deserve a bank that makes it easy to find answers when you need them.

3. When your bank no longer fulfills your needs

Given that it's 2023, one would think that all banks, credit unions, and other financial institutions would offer online banking, including an easy-to-use bill pay feature. Take a moment to consider which features would make your financial life easier. For example, do you need a mobile banking app that makes it possible to check your account balances, pay a bill, or deposit a check on the go? If you're not getting that, perhaps you've outgrown your bank.

The same is true if you need a safe deposit box but your bank does not offer them, or you want both a personal and business account but the bank's business account comes with too many strings attached.

4. When rates are low

The harsh reality is this: Online banks will almost always offer higher interest rates because they don't carry the same overhead costs as brick-and-mortar banks. According to the Federal Deposit Insurance Corporation (FDIC), the national APY on savings accounts is around 0.42%.

This table provides a sneak peek at current high-yield savings account rates among online banks.

There's little doubt that your life is busy, and the idea of shopping for a new bank may be the last thing on your mind. However, if changing banks means having more money to save for retirement or take a vacation, the time spent will be well worth it.