Switching bank accounts may be easier than you think
Are you thinking of switching your everyday bank account, also known as a ‘transaction account’, to another bank, credit union or building society? It may be easier than you think.
| The Government has introduced new measures to make it easier for consumers to switch banks if they are not satisfied with their current provider. Under these new measures, both your current provider and the financial institution you want to move to, will help make the switch. Read four steps for switching accounts |
Here are some tips that will save you time, money and possibly a lot of hassle.
Transaction accounts
Your transaction account is usually where your pay or other income goes in and it's the first place you go when you want to:
- draw out cash
- transfer money to pay bills
- pay for things with your ATM card
- write personal cheques to pay for goods and services, and
- make automatic payments or set up regular direct debits.
The main feature of these accounts is they offer easy access to your money. The trade off is that your money doesn't usually earn as much interest as it might in other types of account.
A better deal could save you money
New transaction accounts come on to the market every day. It pays to shop around to see if there is a different account that is better suited to your needs. For example, there may be an account that has lower fees, easier access, better service or a higher rate of interest. Compare the fees and features of the account you have now with other products on the market. If you find one that's better, then switching could be worth it.
If you're shopping around for a better deal, there are websites that offer more detailed information to help you compare transaction accounts and other financial products. See Cannex and Rate City.
You have decided to switch….what next?
Okay, so you've found an account that offers more of what you want at the right price. When you switch accounts, you'll need to update your automatic payments, including:
- direct debits - for example, payments for insurance policies or electricity bills
- direct credits - for example, your pay, government benefit payments or tax refunds.
Be especially careful not to forget your important direct debits – for example, payments for electricity, water, phone, insurance and your loans.
Four steps for switching accounts
Banks, building societies and credit unions have agreed to make it easier for people to re-establish their automatic payments, which should help anyone switching accounts. This service will be available from November 2008, but many institutions already offer it.
Follow these steps to make the switch easier:
- Set up your new transaction account. Leave your old transaction account open with some money in to cover any automatic payments that need to be made during the changeover period.
- Ask your current financial institution for a list of all your regular direct debits and credits. It will give you a list of your automatic payments from the last 13 months. (You may be charged a small fee for this service.) If your financial institution doesn’t already offer this service, you can find this information by looking at your account statements.
- Take that list to your new financial institution. They will help you re-establish those payments on the new account. They will also help you to give your new account details to organisations that you pay or that pay you.
- After you are sure all your automatic payments have been updated to your new account, you can safely close your old account.
Tip: It pays to double check old account statements. Remember to check on automatic payments between your transaction account and other accounts, such as an online savings account or credit card account. Annual subscriptions or membership fees are another thing to watch out for.
APCA guidelines to help you switch banks
Want to know more about account switching?
You can read about the general account switching obligations of banks, building societies and credit unions in Part D of the Electronic Funds Transfer Code of Conduct (EFT Code). The EFT Code is an industry code that has been adopted by virtually all banks, building societies and credit unions. It provides consumer protection for electronic payment transactions. You can obtain a copy of the Code here.
Switching your home loan
Whether you're interested in switching your transaction account, your home loan or any other financial product, the basic steps you'd take are the same. If you'd like to read more about switching your home loan, see Thinking about switching home loans?
FIDO Website: Printed 07/31/2010
