Here’s how to break up with your bank — and find a better one

The process of moving your banking to another institution is fairly straightforward.

Whatever your reasons for breaking up with your current bank, here are the steps to take:

• Research competitive institutions and consider things like fees, access to ATMs, access to financial advice and interest rates on lending products.

• Note all of your automatic transactions, including subscriptions, recurring bill payments and transfers, and sources of payroll. You’ll need to switch all of these. This is also a great opportunity to cancel unnecessary recurring expenses.

• Open accounts at the new bank; typically a chequing account and two savings accounts, one for emergencies and the other for short-term savings goals.

• Sign up for the new bank’s online and mobile banking. Use a complex password to protect against fraud.

• Set up your automatic and recurring payments, savings transfers or extra debt payments and change your deposit account with your employer. Give the new account information to any other relevant institutions like your child’s daycare who may debit your account regularly.

• Close out your old accounts.

Sometimes the grass is greener on the other side

Common reasons to break up with your bank include: high interest rates on lending products; combining finances with your partner; high fees for regular banking; poor service experiences; inconvenient locations; limited product offerings; lax fraud management practices; and rich incentives from competitors to switch. A new iPad, anyone?

Before jumping on an offer, read reviews on institutions and investigate what they offer. Visit their websites to experience their digital user experience, and pop into a local branch to get a sense of how things work.

Websites like Ratehub and Finder and publications like NerdWallet, MoneySense and Forbes run comparisons on institutions and products each year. In your research you might learn that your current financial institution isn’t that bad, after all … or, that they literally are the worst.

How much service do you need going forward?

Do you need full-service banking? Perhaps you’re a business owner who needs that high-touch support each day with both personal and business matters.

Maybe you have power of attorney on certain accounts, are an active trader with your investment adviser, and you need all the sit-down and virtual support you can get. If this is you, prepare to pay top fees for top-tier service. But shop these rates around to make sure you’re not being gouged.

You may be the person who never needs to walk into a bank branch or talk to a human banker ever again. You may be the DIY investor who requires zero input from anyone regarding investments. In that case, a slick digital interface and top-level chatbot might be atop your wish list. You can save a bundle by going with low-to-no-fee banking options, but expect a lower tier of service.

Your situation might be somewhere in the middle. In which case, look for medium-to-low-fee banking service options that you can access when you need them.

In all service scenarios, two things are vital: easy access to your banking information for budgeting and net-worth tracking and protection of your personal information.

Is this the right time to do a hard credit score inquiry?

When you apply for new credit at a new institution, like a credit card, a mortgage or line of credit, it triggers a hard credit score inquiry.

This impacts your credit, and your score decreases by a small amount. This decrease is typically short lived. However, a hard credit score inquiry is a time-stamp of when you have applied for new credit and these inquiries may stay on your credit report for between two-to-six years depending on the credit bureau.

For these reasons, to keep your credit score as healthy as possible, especially if you need credit, you’ll want to limit the volume of new credit applications with any new potential banks. Pre-approvals typically trigger a soft credit check which doesn’t impact your score.

I’m a sucker for a great incentive, too — especially cash!

But, before you go to all the trouble of switching banks, you may want to ask your current bank to match whatever offer is luring you away.

You might be surprised how willing they are to make it worth your while to stay.

This article was originally published in The Star. Lesley-Anne Scorgie is a Toronto-based personal finance columnist and a freelance contributing columnist for the Star.