Tick and flick – is it really that easy?
Your guide to switching banks
Australians are more likely to get divorced than change their bank. But thanks to a number of government regulations in recent years, changing banks is child’s play—with some three million Australians having made the switch since 2016.
“Open Banking is the newest legislative change which will potentially make switching lenders easier again,” says advisor Edwena Dixon from Pinpoint Finance.
“Effective 1 July this year, consumers have better access to their own data to make it easier to switch lenders in relation to credit cards and transaction accounts. By February 2020, mortgages will become part of Open Banking too. This will mean that consumers are able to see what data their bank holds about them and that data can be shared with other financial institutions.”
With this new legislation in place to help consumers get the most bang for their buck, we’ve put together a simple four-step guide that provides everything you need to know about the process of changing banks.
1) Find the one for you
Research has found 40 per cent of us are still with the same bank we joined as children. It goes without saying that your needs would have changed since then.
Financial advisor Peter Horsfield says that you’ll want to compare fees, frequency of use of account (such as deposit amounts per month to avoid fees), and interest rates—and where possible, simplify.
“In addition, think about whether you want greater access to services, such as a large ATM network, and travellers may want to look for an overseas transaction card and ATM access.”
InfoChoice will ask you some basic information about the type of features you require, and returns results from three different tables: rates, details, and fees. Be sure to check each of them to choose which best aligns to your objectives.
2) Transfer your information
“Institutions are now required to provide you with a list of transactions over the past 13 months,” says Horsfield. “This can help especially with re-establishing direct debits and payments into your account that you can choose to re-establish with your new bank.
“Your new bank will help update your account details with the related businesses and services. However, you will have to manually set up ‘pay anyone’ payments and BPAY transactions.”
When signing up for your new account, look for options such as paperless statements that might make life easier and even save you more in fees.
3) Tie up loose ends
Once you’ve opened your new account, it’s important that you close your old account to avoid paying fees on both, and to streamline your banking.
This is a good last opportunity to make sure that you’ve transferred your old direct debits—particularly those that aren’t month-to-month and you may have forgotten about.
Banks will generally require you to visit, call, or fill in a form to close your account. If you believe that they are making it difficult for you to make the switch, you can contact ASIC to find out more about your rights and their responsibilities.
4) Don’t stop there
The Australian Banking Association says that mortgage customers are switching banks regularly, with more than 30 per cent of all new home loans coming from customers changing their home loan provider.
“Borrowers should always keep an eye on the lending market and should have a good look at their loans every two-to-three years to make sure they’re getting the best deal and paying the least fees,” says Edwena Dixon.
“The market is always changing and there’s more to it than just the interest rates, but making a smart switch can save you a lot in interest repayments and help you to pay off your loan much faster.”
The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.