Whether you’ve become dissatisfied with your financial institution, or think you could be getting a better deal elsewhere, it’s generally a good idea to compare your options before making a decision. Switching your savings or transaction accounts to a new provider is far easier than it used to be.
A few years ago, Kiwibank fought a battle to force its Australian rivals to agree to an industry standard to make switching easier. Before that, changing banks was a dreadfully slow process. Now, switching banks is safe, easy and fast.
Your new bank can take care of everything in five working days. It’s the fastest switching in the world, according to the New Zealand Bankers’ Association. The process also links recurring payments, such as direct debits and automatic payments, to your new bank account number. Your new bank can do all that for you, through a single form. As soon as you request a bank switch, your new chosen financial institution will get its dedicated switching team onto the job.
How it works
If you want to switch banks and have your recurring payments remain as scheduled, you simply:
- Talk to your new bank. They will provide you with a switching bank request form
- Complete the form and give it to your new bank. The form asks for the following:
- Old bank’s name and your account name
- Former bank account numbers
- Date to start the payments transfer
- Signature for an authority and indemnity
Your new bank will identify and transfer all of your recurring payments. They will manage the entire switching process and the account will move from the old bank to the new bank along with all of the payment instructions.
It’s as simple as that – although you will need to set up new PINs and learn how to use your new bank’s online system. If you decide to do the switch yourself, be aware of all the occasional payments you make.
It’s worth knowing that Payments NZ has industry standards and protocols in place around the transfer of accounts and recurring payment instructions from one bank to another.
The standards and protocols ensure that recurring payments are quickly moved from a customer’s old bank to their new bank, to a five-working-day guideline, which is super fast.
The good news is that the Banking Ombudsman has rarely received any complaints from customers who have switched banks – although there are complaints about accounts failing to be closed and debts building up as a result!
Is it really that easy?
Yes and no. Your transaction account is a relatively easy financial product to switch – it’s easier than switching your home loan, or insurance products with your current bank. Essentially the simpler your account and banking needs, the easier the process.
If you do have anything like a home loan, personal loan, credit cards or time-locked deposits with your bank, the process is still possible, but can be slightly more complex.
If you have a term deposit that matures in 90 days, for example, it’ll take that long to switch the money over, so you don’t miss out on the interest.
Can I switch my home loan?
There are plenty of home loans available on the market, and current rates seem to be dropping by the day. So, chances are, you’ll be able to find a lender offering a lower interest rate, lower fees, and more flexible repayment options, or better features, than your current home loan.
Of course, you don’t have to immediately switch to a different provider – you can try negotiating for a lower rate with your current lender first. We’ve covered this topic in depth in our story: How to Switch Home Loans.
However, most Kiwis have a considerable chunk of their home loans on fixed-term mortgages. This means you’re locked in until the term is up, unless you are willing to pay a break fee.
In most cases this break fee is considerable, and will make swapping lenders financially unviable. However, it could be worth considering paying the break fee if you can get a more attractive deal with a new bank.
Know that banks acquiring a home-loan customer will sometimes have ways to help with the associated transfer costs. Kiwibank, for example, has a refinancing package, which offers no legal fees or application fees for a home loan switch to them. Different banks have different guidelines and processes on switching home loans.
For more information on the best mortgage rates currently available, check out Canstar’s mortgage comparison tool, by hitting the button below.
What about switching my KiwiSaver if it’s with my bank?
Switching your KiwiSaver is simple. You can change your KiwiSaver scheme provider at any time. Similar to switching transaction accounts, all you need to do is fill out a form with the provider you want to change to, and they’ll take it from there. The process takes about two weeks, but your old scheme provider may charge you a transfer fee, so check this with them.
It’s a good idea to review your KiwiSaver annually, to ensure you’re getting the best returns for the lowest fees. And this is where Canstar can help. Our KiwiSaver dynamic comparison tables put all the information you need at your fingertips, from average five-year returns to fees. If you want to discover whether you’re getting true value from your KiwiSaver, you can compare providers by hitting on the button below.
Guide to switching bank accounts yourself
- Choose your new bank and open an account in person, online or on the phone. You can compare how the banks stack up when it comes to customer satisfaction with our star ratings
- Withdraw a supply of cash from your old account in case something goes wrong while you’re waiting for your new debit or credit cards to arrive
- Identify all your bills that are paid from your old bank account – don’t forget annual ones
- Redirect your income to the new account. Make sure to take account of all your income, including government benefits
- Set up your direct debits and automatic payments in your new account
- Be prepared for mistakes: they will happen! Few of us are perfect, so monitor your old and new accounts carefully at the beginning
- Keep both accounts open for a couple of months. Don’t be in a hurry to close your old account just in case there is something you’ve forgotten
Otherwise, simply complete the first two points from the list above, then fill in a Switching Bank Request Form with your new financial institution.
What should I look for in a new bank?
- Easy access
Look for the most convenient way to do your everyday banking. This includes having access to a branch and ATM network that is local to your work or home, a highly functional internet banking system and an efficient mobile app to access money while on the go. Pretty much all banks have apps now to do this. For more information on Canstar’s latest online banking award, hit the button below.
- Low overdraft fees and competitive interest rates
It’s a great time for Kiwis to get fee-free accounts, almost every bank offers them. But what matters is the interest rate and the fees. It’s hidden costs, such as overdraft fees and poor interest rates, that make some free bank accounts less competitive than others.
- Low rate loan options
Of course, you don’t have to get a loan at your primary banking institution, but it’s still comforting and handy to know your new bank offers competitive loan rates. Do research on the personal loans and home loans offered by prospective banks. This can help you determine whether or not the bank provides special offers and lower rates for its customers.
Make it a yearly habit to review your accounts – just to ensure that the account you have matches your transacting needs. It can be easy to compare to find an account with the right combination of fees, interest and other features. Canstar can help you do just that, for more information our everyday banking awards, just hit the link below!
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