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Knowing when (and how) to break-up with your bank

A hammer lying next to a broken piggy bank with Euro coins spilling out
A hammer lying next to a broken piggy bank with Euro coins spilling out

Karen Collacutt recently went through a tough break-up. Her bank, it seems, just wasn’t that into her – or rather, it wasn’t that into having her business.

“The bank my husband and I had been working with was a smaller (one)… their hours got less and less and their technology wasn’t up to par,” explains the certified financial planner and founder/prosperity coach at ProsperologyU. “It was becoming really difficult to work with them and so we went through this process of: how are we going to change and how do we change?”

Like any relationship breaking up with your bank can be hard to do; there are a lot of moving parts, a lot of things to consider. That’s why Collacutt advises anyone considering making a change to fully examine the root problem first.

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“When you have a challenge with a bank, the first thing you want to do is see if you can resolve the problem,” she says.

Typically, the main concerns Collacutt comes across amongst clients are related to customer service or technology.

“Occasionally it’s fees but a lot of people just ignore their fees which is amazing to me,” says the money coach. As for the recent trend of banks offering iPads for switching, Collacutt is quick to cut that excuse. “Don’t just switch because one of the banks is offering free iPads – if you’re brand new to banking and you need your first account, that’s a great way to get a new iPad but this is a huge amount of work (otherwise).”

If the reason you’re moving is a customer service qualm, be forewarned, despite the colour of their couches, the banking experience doesn’t vary widely in the realm of people-to-people interactions.

“You often end up in the same situation,” says Collacutt. Instead she recommends swapping branches with the same bank to try and find a representative you like working with. Technology is the same, most banks employ tweaks on the same type of technology.

“If it’s a fee challenge then get on the phone with the bank or your new customer service person and see what they can do,” she says. “There’s often a variety of strategies you can use to lower your fees.”

When it just won’t work

Of course, Collacutt recognizes that not every problem has a clear fix and sometimes a break-up becomes all too necessary. The first step, says the money coach, is the come up with a list of the criteria, the things you’re looking for in your new banking partner.

“Start looking at your bank options… look at the major banks, look at some of the smaller banks and credit unions and go and actually meet the people,” she says. “Build a relationship and get them to help you as you’re transferring things over.”

She points out that while many banks have some sort of transferring system, ultimately, it falls on you to make sure the transition is smooth. Collacutt say she’s heard horror stories of accounts going into the red over automated transactions.

“People start shutting things down and they think they have moved everything (but) you might not remember all the different (automated transfers) you have,” she says, adding it’d be wise to have a buffer of funds in your old account to avoid missing payments that may still be connected with that account.

“I recommend keeping your old account open for another full month at minimum so you can be sure all the auto transfers are complete,” adds Collacutt. “It does mean you’re paying double fees for a short period of time but it’s better than having an overdraft or an NSF and having to argue with services that didn’t get paid.”

Once it’s time to properly say goodbye to your old bank account, the money coach recommends sealing the deal with some paperwork saying the account truly is closed. She also points out that just because you’re breaking up with a bank doesn’t mean you can’t be friends with the other departments.

“If they’ve got investments and want to move them, that can be really costly, especially if the market is down at all,” she says, recommending leaving them if possible. The mortgage portion of most financial institutions is also typically a separate department so you don’t need to worry about seeing your ex. “For the mortgage department, as long as they’re getting paid, they don’t really care.”