At some point or another, some of us will be faced with the decision to switch bank accounts and banking service providers.
Recently, the Trade Union Solidarity urged its 150,000 members to switch from ABSA (which it rated as South Africa’s priciest bank) to First National Bank (FNB). If only 25% of the members had followed the request, ABSA would have felt a considerable blow to its business.
There are numerous reasons for wanting to change banking service providers:
- Maybe the bank has become too expensive?
- Maybe the level of service quality has decreased?
- Maybe you’ve had a bad experience and feel like you have been treated badly?
- Maybe bank’s rewards programme only gives free holidays to Mauritius during typhoon season.
Despite the reason for wanting to change your banking service provider, the process of doing so is no small task – a nightmare, in fact – as all existing accounts have countless debit orders, stop orders and both incoming and outgoing payments.
How can we make the process less painful? What are the challenges?
Begin by considering the scope of offering from your current bank, and research those of alternate service providers. The Banking Association of South Africa (BASA) advises that you take the following into consideration before you start the process of switching:
- The rates and fees of your current bank versus another bank;
- Whether the location of branches and ATMs meets your needs; and
- The additional benefits on offer from both banks.
Depending on how you bank, the location of branches and ATMs may be of lesser or greater significance to you. Other factors may affect your decision too, such as online and mobile banking functionality.
Once you’ve decided on a new bank, how do you go about switching?
BASA states that the process of switching banking service providers it can be done in three easy steps: open a new account, switch transactions, and close your old account. Although the process is not exactly a simple one, BASA offers a Code of Banking Practice which covers the process of switching a transaction account to another bank. It spells out your role, as well as that of both your old and new banks. The code relates only to transactional accounts, not deposits and loans, which are individual contracts. You may terminate deposits and loans according to the contractual terms, it says.
Furthermore, First National Bank (FNB) suggests that you allow 45 days for the full process of transitioning between banking service providers.
If you are considering changing your banking service provider, follow these steps:
- All debit orders on your account will have cut off dates
- As switching debit orders occur at different dates, be sure to leave money in both the new and old bank accounts
- The new bank has to have correct policy numbers to ensure they switch the debit order correctly
- Some banks will send you an sms notification to confirm each move, others will not
- Your employer will also have a cutoff date for salary to be paid into the new/correct account
- Don’t forget that you will have to inform SARS that your bank details have changed (not an optional extra)