How To Set Up Your Life For Maximum Bank Account Portability
Aking your bank account portable has become a pretty big issue these days and can be very cost effective if you find a bank who will participate. The portable concept is similar to the portable cell phone number, which occurs when you choose a different service provider in which you can keep your current cell phone number.
Banks who jack up fees, charge more for checking accounts and the most recent B of A incident about charging its customers every time a debit card is used, can benefit greatly from bank account portability. If one bank’s fees are going up, and another one is offering free checking, lower fees, and free debit card usage – changing banks to a more reasonable banking institution can save you money.
But, unfortunately, bank accounts are much more complicated than simply changing cell phone companies, mostly because of the many transactions that are connected to your accounts such as direct debits, pre-scheduled payments, linked accounts, mortgages and not to mention the linked accounts such as savings and business accounts.
Not So Difficult:
The branch identifier system (BSB) under the current system would require a unique customer number, which would be used as an identifier that could carry all of your banking information to all banks through a computer system, which would make it simple to switch accounts and banks, and make it easier for customers to switch lenders in favor of a better deal.
But, experts say that it would be extremely expensive to initiate this portable banking system. The Netherlands did a study on such a system, coming up with a whopping estimated cost of between $400 and $700 million dollars. With the plight of banks today struggling to stay afloat, this is unlikely.
Quite a few banks opposed the portability plan, because of the cost and the possible complications, even though it would drive competition and force banks to become more competitive in their fees, interest rates and banking and mortgage packages. Which in turn would benefit their customers greatly. The cost is just to great.
Costs to Consumers:
The proposed plan is becoming quite controversial, some experts even advising that such a plan would most likely pass the costs on to other customers, in higher interest rates, or other fees and costs.
The Securities and Investments Commission said – about making banks more portable, “… that relationships that customers have with their bank and the arrangements that they have in place with payments to third parties, make it necessarily complex to switch (banks),” and that studies are in effect today that are delving into this issue to find a better and less complicated way to get this done.
The Netherlands did a study on such a system, coming up with a whopping estimated cost of between $400 and $700 million dollars.
Successful Portable Banking:
General Manager, Greg McAweeney, of RaboDirect, the company responsible for the successful operation of the portable Dutch system, says “You get a new account number but the banks keep your direct debits and bill payments live for 13 months and they switch them for you.” This is what worked in the European account switching system.
Antiquated Banking System:
Also mentioned by McAweeney, “The big banks say there’s plenty of competition but they’re hiding behind an antiquated payment system that’s costing businesses and consumers dearly.”
That is the other issue that is keeping banks from making it more competitive for consumers and customers to switch banks easily – the antiquated computer systems in place. Apparently, the big banks rely on 40-year-old processing systems that they had no reason to update because if it works, why fix it? In order to accomplish this task, computers must be updated which is going to cost them.
What You Can Do:
The point though, is how do you set yourself up for the benefit of walking into a potential new bank, sliding your ATM card through a bank slot – and having the information readily there to obtain their services?
Not as easy a task as one might think, however companies have been set up to make this transition easier, and more affordable. Check out Conversation’s website for a report on how bank switching can be easier for consumers and how we as consumers can demand easier transfers between banks.
New Bill to Help Consumers:
Bitter Wallet banking spokesperson, Andy Dawson says, “….but fewer of us are keen to switch banks, even if we do think we can get a better deal elsewhere. And the Financial Services Consumer Panel think they know why. They reckon it’s because we don’t have portable account numbers that we can take with us when we switch from one bank to another, in the same way, that we do when we switch mobile providers.”
Banks must remove all barriers to consumers’ moving accounts, and virtually eliminate the cost of transferring to the new bank, including eliminating the costly move of insurance and the dreaded exit fees. Come on, they’ve been taking our money for years, isn’t it time they start to give back?
So, it is looking promising. However, in the meantime, unlinking your accounts, although it is a hassle, would be wise if you want to switch banks immediately. The direct deposits, direct ATM payments, scheduled auto-deducts, and payments, as well as auto-pay mortgage accounts and savings and business accounts, should all be removed and handled manually, or on their sites. Remember checks? It might be a good idea to use them until the move is complete.
Keeping your bank and mortgage accounts as uncomplicated as possible, without any outside credit or debit interference will make the transition to a new bank and/or lender easier for you, and less likely to cause you frustration.