Ask a Nerd: What Are the Signs That I Need a New Bank?

My favorite emails in the past few months have been the ones from my bank, letting me know that my savings annual percentage yield has gone up and that overdraft fees have been canceled. If you haven’t gotten either of those lately, then it might be time to open a new bank account with a different financial institution.

You don’t have to abandon your current bank if it’s useful to you. As both a banking nerd and a general consumer, I find it helpful to have accounts at several different institutions: a traditional bank, a credit union and an online bank.

Each account gives me something that the others don’t. A traditional bank offers some products or services I can’t find at my online bank, while my online bank pays much higher interest rates. So using a mix of institutions can help you keep — and earn — more money.

What used to be a rare phenomenon — a bank account with few fees — is becoming more common. “There’s just too much competition in both the neobanking space and even in traditional banking nowadays to be paying really any fees — particularly overdraft fees or fees just to have the account,” says Ramona Ortega, founder of My Money My Future, which focuses on closing the racial wealth gap and providing quality financial advice.

Even if you haven’t been able to increase your savings contributions in recent months (thanks, inflation), you should be seeing a little more money added to your account. As we’ve seen in the past year, when the Federal Reserve raises the federal funds rate, banks generally also raise their rates. If your bank account hasn’t increased your savings interest rate this year, that’s a red flag (and a green light to change banks).

The national average savings rate has increased from 0.06% at the beginning of 2022 to 0.33% as of January 2023, according to the Federal Deposit Insurance Corp., but the best interest rates are now more than 10 times that (that’s around 3% and up).

You should be able to get help easily for your banking woes, through a customer service channel you like using. Prefer to communicate online but your bank or credit union doesn’t offer online support? Look for a bank that answers questions and provides timely help over social media. Or, if the idea of sending a tweet to a bank makes you cringe, plenty of financial institutions offer more and different options. I prefer a live online chat, in-app messaging or a quick phone call after work, so I make sure my bank has all three options, plus extended customer service hours.

If you feel more comfortable speaking in a non-English language, shop around to find a bank or credit union where representatives speak it. If you prefer to speak in Spanish, for example, consider a Hispanic American-owned bank or credit union.

If your financial institution doesn’t offer the loans you’ll need at competitive rates, that’s a good sign that you should consider opening an account with a bank or credit union that does.

Don’t think you’ll need a loan for a while? Take this step now anyway because it can be helpful to have an account in good standing with a financial institution for a while if you’ll eventually need to borrow money.

“You generally get a better rate when you have a banking relationship at the institution,” Ortega says.

Opening a new bank account can take just a few minutes and the payoff could be priceless: saved time, better earnings for your money, more accessible help — and some peace of mind when it comes to your finances.