An update to your savings account could very well be an upgrade.
Let’s face it, changing your savings account is troublesome and few people want to do it. However, there are some good reasons to do so. While you’ll have to make some updates (such as informing the employer who banks in your cheques), a simple switch can bring some big advantages over time. Here’s when you might want to consider changing your savings account:
1. The interest rate doesn’t match your spending habits
The typical interest rate for a savings account ranges between 0.125 per cent per annum, to 0.5 per cent. However, there are now bank accounts that can go beyond this.
For example, say you use a DBS Multiplier account. If one of the following: your monthly credit card spend, home loan repayment, insurance or investment, plus your credited salary is at least $2,000 or more, your interest rate can go up to 1.8 per cent. This is more than triple the usual interest rate.
2. You want to keep a part of your finances private
For security reasons, it’s a good idea to confidentially keep some money in a separate account. This is useful when someone else – such as a family member – has access to your bank account, or can monitor it.
For example, retirees who have their finances looked after by a caretaker should set a portion of their money in a separate account, in event of situations like theft. If the caretaker proves unreliable, they at least cannot run off with all of the retiree’s cash.
Do consider the benefits of quietly setting aside a second savings account, away from prying eyes.
3. You find the bank’s administrative process or user interfaces too cumbersome
Not all banks are equal, in terms of service and digital banking. You may find that your bank is too unresponsive to queries, or that their digital banking platform is unreliable.
Don’t underrate the degree of inconvenience this can cause: you might find yourself stuck at an airport overseas, because you can’t access funds for an alternate flight until your password is reset…sometime tomorrow.
If you’re constantly frustrated by you bank, it may save you time and stress to just switch.
4. You can never find an ATM machine when you need it
We don’t want to point fingers, but some banks seem to have a serious shortage of ATMs. You could find yourself having to travel two or three MRT stops just to withdraw cash or deposit money.
If you often need to make cash transactions from your savings account (e.g. you run a small business and often have temporary helpers to pay), you may want to switch to a bank with more conveniently located ATMs.
5. You’re opening a joint account
If you’re opening a joint account for any reason (e.g. you’re getting married), consider if your existing bank will serve your purposes as a couple.
Shared spending habits often differ between individuals and couples. For example, say you don’t like to use credit cards, but your spouse uses them as a mode of payment. You may want to open a joint account that also rewards you for credit card spend, if your current bank doesn’t.
6. You’ve just moved to Singapore, or are moving out of Singapore
While banking is global these days, it’s still preferable to have a local bank. It’s always best to have an actual bank branch that you can visit, and through which you can speak to the relevant managers and bank tellers.
Alternatively, if you’re always moving in and out of the country, you might want to consider switching to a Multi-Currency Account (MCA). This can save you the cost of having to make a lot of currency conversions.
7. Your bank doesn’t seem to value the relationship
Some banks only ever seem to give perks to new clients. If there’s a free luggage carrier, it goes to “new to bank” applicants. If there’s a higher interest rate, it goes to “first time bank customers”.
But what do the existing customers get?
On top of these promotions, you may feel that customer service is just sub-par. A simple phone call to replace a debit card might take hours, or you might unfairly be held liable for credit card theft.
In these situations, don’t be timid and switch your bank. Remember, if you allow a bank to treat you badly, it will carry on and do the same for other customers too. When it comes to a bank’s performance, you can vote by taking your money elsewhere.
By Ryan Ong
Ryan has been writing about finance for the last 10 years. He also has his fingers in a lot of other pies, having written for publications such as Men’s Health, Her World, Esquire, and Yahoo! Finance.