Switching banks

Switching banks can seem a big hassle. You've got to get your wages or benefit credited into a new account, you may have to transfer your mortgage, and there are all those other payments that you've set up to come out automatically - things like power, phone, rates, donations, childcare fees, and your superannuation scheme.

You'll also need to go through the process of getting new EFTPOS and credit cards, cheque books, and PINs. It's a good idea to withdraw plenty of cash before the process begins, so that you're not caught short.

Switching tips

When you're switching banks you need to keep an eye on both your old and your new banks to make sure they do things correctly. Here's our advice on handling the process.

1. Before you switch, ask your bank to do better

Ask your existing bank to look for ways to cut your costs. Make an appointment with a personal banker at your branch to do this. Would it help if you changed or combined accounts, or consolidated your debts? Once you know how much you could save, you'll have a benchmark to help you compare your bank with others. And it may save you the trouble of having to switch at all.

2. Check your accounts

Look at a few months' of old statements, and work out how you use your bank. How many transactions do you make each month? How many times do you use EFTPOS, ATMs, cheques, over-the-counter deposits and withdrawals? How many direct debits and automatic payments do you set up? How low do your balances fall? Are you earning interest from any of your accounts? Gathering this information will help you figure out what's causing your fees to mount up.

3. Shop around

First, use our resources to help you work out possible accounts to move to.

• Our interactive bank fee calculator lets you compare fees and find the best account.
• Our database of account details has the raw data on bank fees and interest rates.
• Our credit card calculator will help you find the best card and reward scheme.
• See our Term deposits database for the latest rates.

Then check the brochures from the banks or their websites. Remember, you don't have to get all your banking services from one bank. For instance, don't be put off an account just because it doesn't have a credit card - you can always get one elsewhere.

4. Set up the new accounts

You can apply for a new transaction account over the phone, online or by going into a bank branch. It may help to go into a branch if you're not sure exactly what you want. A personal banker can talk through your options. When you go to the branch, take them a breakdown of how you use your accounts.

If you open the account without visiting, you'll still need to go in at some point to sign documentation, identify yourself and be issued with a PIN number. Remember to take in appropriate ID and your IRD number.

5. The switch

Open the new account before you close the old one and keep both accounts running for a few weeks. This gives you the chance to reorganise outgoings, including direct debits and automatic payments, and to make sure your wages are going where they should.

• Direct debits: You'll need to phone each company (phone, power, etc) and get them to send out a new direct debit form. Allow plenty of time for this to come through. After filling out the forms with the details of your new bank, return them to the companies debiting the money.
• Wages: Don't forget to tell your employer your new account details.
• Other income: Make sure the details are changed for any money you receive from investments and other automatically-paid sources of income.
• Automatic payments: Remember to re-set automatic payments with your new bank and make sure they go out on the correct dates. You can do this yourself through phone or internet banking or through your branch (for a larger fee).

6. Closure

Leave enough funds in your old account to cover any hidden fees. Once you're sure everything has worked out, close the account and cut up any old cards. Switching banks can often be more complicated and expensive if you have a mortgage. Before you switch, ask your bank whether there are any fees for transferring/cancelling a mortgage.

Credit unions

If you're thinking of switching, there are many more options than just the big five registered banks. The most obvious competitors are Kiwibank, TSB Bank, and the ASB-owned online bank BankDirect. But thousands of New Zealanders also "bank" with organisations such as the PSIS, building societies such as SBS Bank, and credit unions such as the Credit Union Baywide. Many of these smaller organisations offer internet "banking" and even a limited form of credit cards.

Credit unions have a lot to offer. Their advantage is that they are co-operatives - and surpluses are returned to members through dividends, reduced fees, and increased interest rates on savings. The main drawback is the higher level of financial risk compared with the registered banks.