Why and How I Changed Banks
Nov 18, 2018
Each week I receive great emails from YOU where you ask me all sorts of questions regarding life and money. Often they are personal to the writer so you won’t ever see me share them here but sometimes they are more general in nature and by discussing them on my blog we can all learn a little more about personal finance in New Zealand.
Tim got in touch asking about how to go about changing banks and he had the following questions:
Why did you change banks and what criteria did you have for choosing a new bank?
How did you change banks i.e all accounts at once or set up a new account/term deposit to get a feel for how the bank operated?
What obstacles did you encounter and how did you overcome them (for example did your old bank create enticements to stop you leaving!)?
Any regrets about leaving the old bank or would you do anything differently if you were changing banks again?
Where it all began. My Trust Bank bank books.
I’ve changed banks a number of times over the years. I started out with Trust Bank when I was at High School and continued with them into University. It was acquired by Westpac so I was transitioned to them. Then I met Jonny and we decided to pick a ‘neutral’ bank so joined National. They were acquired by ANZ so we banked with them for years and picked up a credit card with Westpac along the way (which I chopped up last week by the way). Reading this it would appear that I didn’t change banks in as much as the BANKS kept changing themselves!
However, more recently I have been changing the way I bank so I felt I was in a good position to answer Tim’s questions. Here goes….
Why did you change banks and what criteria did you have for choosing a new bank?
The reason I made my last change from ANZ to TSB was due to being PISSED OFF! Firstly I was annoyed that when we paid off our mortgage their first thought was to get us to borrow more money and I had to be quite direct in telling them to close off our lending facility.
Their argument was “But what if you go for a drive this weekend and fall in love with a new house - if you keep the lending in place it could be yours”!
Then, with our debt gone, as we started to increase our bank balance I wanted to open the only thing I knew about at the time, Term Deposits. I would shop around for rates, sometimes finding ANZ was less than another bank. Sometimes they would match the rate and sometimes they would not, although I was persistent and often secured the better rate, they were always difficult about it. I became just generally dissatisfied and aware that they would prefer to lend me money than HELP me save it. We paid monthly account fees and what have you and it just irked me that I didn’t think I was getting value for money.
The final straw was when we built our house. We had over $300,000 sitting in our ANZ bank account waiting to be used to pay for the construction of our new home. When you build you take out large chunks to pay the builder each month, say $30,000 - $50,000 at a time. With ANZ I only earned interest on this money if I made no withdrawals and despite me phoning them asking if there was some account that would let me still earn a little interest it was a firm NO. And basically, I thought that completely sucked. What about the person building a $1,000,000 home? Did they earn zero interest on that money too? I just didn’t seem right.
How did you change banks i.e all accounts at once or set up a new account/term deposit to get a feel for how the bank operated?
I asked my friends who they banked with and were they happy? One of them mentioned TSB, who I admit I had never heard off. But I pored over their website and liked what I read. New Zealand owned, smaller but big enough and I could do everything online. I chatted on the phone (to the same person each time!) and pretty quickly had set up a couple of accounts, the main point being to get our house build money of $300,000 or so working for us and earning some interest (I can’t recall how much sorry). I had to go back into ANZ and manually transfer all of that money over to TSB and THAT got the bank tellers attention and she asked why I was changing. I told her exactly why and she tried hard to get me in front of one of their sales team, but it was too little too late as I had repeatedly tried to get better service out of them with no luck.
With that chunk of money now working for us and other accounts set up and working well, I ran the two banks in parallel for a month or two, using only my new bank TSB accounts while I made sure there were no transactions still coming in or going from ANZ. Then I closed all my ANZ accounts fully. It was a relatively straightforward transition.
What obstacles did you encounter and how did you overcome them (for example did your old bank create enticements to stop you leaving!)?
I tried many times to bend ANZ to my will and get them to help me meet my OWN monetary goals, after all, isn't that what all of their advertising is on about? But in my view, they were too big, too uncompromising and too focused on dishing out home loans. My personal financial position meant diddly squat to them and to me at least it really showed. It was only when I physically went in to withdraw all of our money did they try to step in, by which stage it was way too late. Another obstacle to changing a bank is making sure that I changed any and all payments coming in our going out of the bank accounts I was closing. And that takes a little time to do that. I just printed out a couple of months worth of transactions and highlighted any that I needed to change, contacted each business with my new details and crossed them off as I did it. You do need to be organised here and having that list really helped remind me who I had notified of my details and who I had not.
Now, I would imagine that changing a bank when you have lending attached, like a mortgage, might lead to another level of complication that you would prefer to avoid. I would think that changing banks mid mortgage would not be on everyone’s ‘to do’ list BUT I’m sure there are instances where it happens i.e. selling a property to buy another and changing banks to secure a better mortgage rate? So, if anyone out there can speak about this then please leave a comment below.
Any regrets about leaving the old bank or would you do anything differently if you were changing banks again?
Ha Ha Ha! NO, is the long answer!
Changing banks is like leaving a bad relationship, once you are done you realise you should have left way sooner. The grass is indeed greener on the other side.
Hope that answers your questions, Tim?
