Frustrated with your bank or credit union? Here's what you should consider before making a move

It has been some time since I stepped into a bank. Like many Canadians, most of my banking needs are either automated or can be done online. 

So, last weekend, when I heard that Vancity Credit Union experienced a complete online service shutdown, it was concerning. 

Thankfully, there are steps we can take to minimize the effects of a service outage that don't need to be as drastic as closing all of your accounts and moving elsewhere.

Get a backup account

I am a Vancity member and my account was affected, but I wasn't overly inconvenienced as I also bank with another financial institution where I could access funds and pay bills. 

While I don't recommend paying a second set of banking fees to avoid the odd service interruption, it often makes sense to have a backup account, as long as it is free. 

There are financial institutions that offer free banking to customers under the age of 25 and over 55. If you don't fall into these categories, fees are often waived if you keep a minimum balance in your chequing account ($1,000-$3,500, depending on the institution).  

Another option is to sign up with an internet bank such as Tangerine, or certain credit unions like Coast Capital, which offer free transactions.

Make sure you qualify

If you do feel the need to quit your current financial institution, my advice is always the same: Make sure you qualify for the new product or account before closing your existing ones. 

This advice is universal across all financial products, such as bank accounts, credit cards, lines of credit and especially insurance. 

Resist making an on-the-spot emotional decision to withdraw all of your funds and close your credit facilities. A friend of mine did just that and he regretted it. 

At the time, Steve had a credit card with a $3,000 limit, access to online banking and an ATM card, all of which he closed. When he went to open new accounts at a different financial institution, he was only offered a simple savings account, no chequing account and ATM card, or online banking. He tried several banks and credit unions, but the results were the same. 

The problem was his credit history which had taken a hit over the previous year. The lower a person's credit score, the greater the number of restrictions on their accounts. 

Steve realized that just having a savings account wouldn't cut it. He needed online access, a chequing account for his automated payments and an ATM card. He ended up returning to his original bank and asked to have his accounts re-opened which, luckily, they were able to do.

Is a free iPad really worth it?

The moral of the story is that the grass isn't always greener on the other side, particularly if your credit is less than stellar.

However, if you are often frustrated with your financial institution and do not have a strong connection with your account manager, you should consider moving. People with good credit and plenty of assets will be welcomed by a rival financial institution — they may even offer you an iPad or a signing bonus.

Personally, I am keeping my account at Vancity mainly because it is a hassle to move and I have a good relationship with my account manager. She answers my calls promptly and looks out for my best interests, so it's a relationship I'm not willing to lose over a temporary inconvenience or an iPad.

I'm also maintaining my relationship with my other bank. I'm a planner by nature and — be it banking or most other things in life — it is always good to have a back-up plan.

This column is part of CBC's Opinion section. For more information about this section, please read this editor's blog and our FAQ.

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