3 Reasons to Switch Banks in 2024

Banks have come a long way -- gone are the days when you had to choose from only the banks in your city, and if the accounts they offered weren't quite up to par, you were stuck. Now, some of the best banks are located entirely in cyberspace, and you can access their services and accounts from anywhere.

If you've been with the same bank for a while and are becoming frustrated with it, you can switch. And since we're approaching the end of 2023 (can you believe it?), now might be the perfect time to find a new home for your money. If any of the following reasons describe you, I recommend switching banks.

1. You're earning peanuts on your savings

Earning a laughably low APY (annual percentage yield) on your savings is so 2021. The Federal Reserve has increased the federal funds rate 11 times since 2022 in an attempt to fight inflation. A higher federal funds rate has the effect of making it more expensive for consumers to borrow money (such as in the form of a personal loan or credit card), but it has also led to higher APYs on savings accounts. With a higher APY, you'll earn more on your money, just for leaving it in the account.

Unfortunately, some big brick-and-mortar banks haven't kept pace. The FDIC reports that the average APY on all savings accounts right now is 0.46% -- but the best savings accounts pay more than 10 times that figure, so you can extrapolate that others pay far less. If your savings is languishing in an account paying, say, 0.01% (the real APY on one of my two savings accounts), it could be time for a change.

2. You're being charged fees

Why should you have to pay for the privilege of keeping your money in the bank? Good news -- you don't. Account maintenance fees are a common feature among checking accounts, but some banks have phased them out entirely.

Online banks have lower overhead costs than brick-and-mortar banks do, so you're more likely to find a fee-free checking account offered by one. Some banks have even reduced or ended overdraft fees. If you've already accidentally overspent your account balance, you don't need another fee on top of it.

3. Your current bank's customer service is lacking

Finally, if you're struggling with lousy customer service at your current bank, consider switching accounts in the new year. If you have a question or need help with your account, it's important to be able to access a real live human person.

Online banks shine in the customer service department, too -- many of them offer 24/7 access by phone or chat. Plus, many online banks have stellar mobile apps with features like budgeting tools, credit monitoring, and more. If your current bank stinks at customer service, make the change.

Changing banks is easier than you think

OK, let's say I've convinced you that it's time to find a new home for your money. It's going to be a pain in the neck to open new bank accounts, right? Actually, it'll probably be easier than you realize, especially if you opt for an online bank. You'll be able to open accounts from home, at your convenience, and you only need a little information (such as your photo ID, Social Security number, address, and birthdate) and time.

Switching your bills and direct deposits is the part of the process that could take a bit longer, but it still shouldn't be too much of a hassle. If you're opening a checking account and need to move your paycheck direct deposit, you'll need the routing and account numbers. You'll get those when the account is open, and you can send them to your employer's HR department to ensure the money lands where it needs to.

Similarly, if you have bills set to auto-pay every month, you need to update the payment information. I recommend going through a few months of your most recent statements from your current bank to find them all -- you don't want to forget to move a bill and end up with a late payment penalty (or an overdraft fee on the account you're closing).

If you've been dealing with customer service hassles or even just a painfully low APY at your current bank, consider making a bank switch in 2024. You (and your money) deserve better.