By Laura McMullen
Ditching your mediocre bank may not be as challenging a New Year's resolution as, say, learning a new language, but it can certainly pay off. Make 2017 the year you stand up to costly fees, suboptimal returns and bare-bones services. Below are three signs you should switch banks.
1. You're getting slammed with fees
Find out what fees your checking account carries by calling your financial institution or locating the fee schedule on its website. Are you charged fees for monthly maintenance and using out-of-network ATMs? How does your bank handle overdrafts? Compare these fees with those of other checking accounts to see whether you can do better. Consider financial institutions that either don't charge maintenance fees or waive them if you keep a minimum balance. Look for banks that reimburse out-of-network ATM fees and offer generous overdraft policies. And while you're at it, check out available bonuses for new accounts. You'll likely find that online-only banks and credit unions charge the least in fees. Weigh the savings against the disadvantages of fewer or no branches.
2. The returns on your savings account are minuscule
OK, no one is making much on their savings right now, with the average national annual percentage yield at around 0.06%. But if you're willing to shop around, you should be able to find rates above 1%. Check out NerdWallet's comparison of savings accounts. Keep in mind that online-only banks and credit unions are more likely to offer higher yields than traditional financial institutions.
3. Your bank offers few online or mobile features
These days, many banks offer online and mobile tools to help you keep track of your money and budget it. Depending on the financial institution, these services can allow you to pay bills online, automatically transfer money from checking to savings and receive email or text notifications when your balance is low. If these tools would be useful to you but aren't offered by your current bank, that may be reason enough to switch.
How to switch banks
Say you decide it's time to switch banks in 2017. First, choose a new bank thoughtfully so you don't have to repeat this resolution for 2018. Make sure the new bank has the types of accounts you want and low fees, and learn what kind of interest you'd earn on savings and pay on credit cards and loans, should you choose to use those products. Confirm that whatever institution you entrust with your money is insured, too. Banks should be backed by the Federal Deposit Insurance Corp. and credit unions by the National Credit Union Administration.
Once you've decided on your next financial institution, make the transition in steps:
Get organized. Itemize the ways you interact with your current bank. Do other accounts, like Amazon or gas payments, draw from your checking account, for example? Are bill payments automatically pulled from your checking account, and is your paycheck directly deposited into it? Do you write checks from this account? Making this list will help ensure nothing slips through the cracks.
Open the new bank account. Work with customer service of your old and new banks to determine the best way to move your money -- but don't move all of it just yet. Keep enough in your old account to cover any outstanding checks or automatic payments. If the old account requires a minimum balance to avoid a maintenance fee, keep at least that amount, too. Next, change your direct deposit information so that your paychecks go to the new account. After that first paycheck lands, you're clear to set up bill payments. This is also the time to tackle the loose threads from your list in Step 1, such as updating your billing information in linked accounts and ordering checks.
Close your old account. Make it official, once you're sure all transactions and checks have cleared. That's one resolution down; time to work on your French.
Laura McMullen is a staff writer at NerdWallet, a personal finance website. Email: firstname.lastname@example.org. Twitter: @lauraemcmullen.