Sunday, 4 May 2014

How I Divested - Choosing another bank

You may have read my previous post about why I'm leaving my fossil-funding bank. Here's how I assessed which ethical bank to choose.

Firstly, I don't have a mortgage but I do have some savings. I have one bank used mainly for transactions and another bank for my savings and my credit card. I like this setup so I decided to swap each fossil bank to one or two ethical banks.

For convenience, I will call a fossil funding bank an f-bank and an ethical, non-fossil funding bank an e-bank, and we all know 'e' comes before 'f'.

Hmmm Which bank?
I made a spreadsheet-table with each column heading asking a question, and each row representing the answers for each e-bank & account I was considering.

In Australia, we have the benefit of a bank assessment report performed by Market Forces and independently verified. Note that what is considered an e-bank can change over time. Here is a link to Market Force bank comparisons:

I looked at the comparison list and chose three e-banks that were familiar to me. I then did my own online research. Fortunately, I already had an account with one of these, so that it was a likely winner but it did not meet all my needs.

An example bank comparison spreadsheet
For a transaction account, I considered these column headings:
  • the branch & office locations (which isn't so important these days),
  • having zero fees for most everyday transactions,
  • the ATM network used and how convenient they are to me,
  • the option of a Visa Debit Card.
I found one e-bank that uses the Westpac/St George ATM network and another that uses the RediBank / NAB ATM network. The e-banks generally don't have their own ATM networks so to obtain cash there isn't much choice. I found my choice of using these f-bank ATM networks acceptable, as my money is not with them and the e-banks only pay these f-banks a fair fee for the use of the ATM.

Three of Australia's big four fossil-funding banks:
ANZ, NAB and Westpac
For my savings and credit card accounts, I considered these column headings:
  • Savings Rate
  • Term Deposit rate for 3 & 6 month periods
  • Credit Card Type (MasterCard or Visa)
  • Credit Card Rate
  • Credit Card Annual Fee
I came up with one e-bank that could do everything as good as or better than my current f-banks, but I they used MasterCard instead of Visa. This isn't a big deal unless I travel to places where Visa is the only card taken. For this case, I could use the Visa Debit facility on the e-bank that I already have an account with.

Thirty seconds after opening a new bank account
nothing this ominous happened
So it seemed clear which bank for me to choose. But I was nervous about changing banks. Surely when I changed banks, the worst financial disasters were likely to happen. But after a bit of rational thinking and deep breathing, I was confident the sky would not fall in.

I collected my identification getting ready to walk into the banks office to open an account but they said is was quicker to do it online and that is what they would do if I was at their office. The internet has changed banking a lot since I last opened an account with a new bank.

Applying for accounts online was very quick and I also found calling them for help was very efficient.

I could start transferring funds immediately that day which I did. I've yet to get my card and need to setup my credit card account so completing the process may take a few weeks, but after initially being hesitant, I progressively became confident with what I was doing, one step at a time. I even got $4 interest for my savings funds that were only in the account for the last two days of April. More than I expected.

So be bold, go forth and divest. It is an empowering experience.