Day-to-day banking: What are the options?

Mr Paul Redmond outlines how customers can respond to recent changes in the banking market

In February 2021, the announcement came that Ulster Bank, a popular high street bank, with branches in every town and city in Ireland and Northern Ireland, had decided to exit the Irish market. Following on from that in early March, Bank of Ireland decided to close 103 branches and last week KBC, a recent entry to the Irish banking world, also announced their imminent departure from Ireland.

Although customers are being told to remain using these banks and their facilities for the immediate future, as the wind down of these banks will be gradual and take some time, at some point in the next year we will have to decide how best to carry out our day-to-day banking.

For products such as mortgages, these banks have already clarified that there is no need to switch, the banks in question will forward on their loan books to another bank and everything will remain the same as what is in place currently. However, it is not quite the same story for our everyday banking; we all tend to use the one bank for all our banking needs, such as current accounts, credit cards, some savings, and maybe some personal lending. We have the apps on our mobile phones, making it all convenient and under the one roof.

With the banks closing up, we will be instructed, with plenty of notice to begin the process of moving these banking products to another bank. This can create apprehension and questions: What are our options? Do we have only the three main high street banks available? What are their costs? And more generally, what is involved?

Current accounts

We all need a regular bank account that we can use daily, we need a Visa debit card that we can take out cash at the ATM machines, tap for our purchases if below €50 or pay with the card if the purchase exceeds this amount. In particular, within the last year as a result of Covid-19, we have never used our current accounts more, as we shopped online and tried to avoid using cash. So, what should we look for when deciding? The first factor is to consider the monthly cost of operating a regular current account?

The website www.CCPC.ie is an excellent impartial site that compares all the costs of every provider, breaking it down into the monthly cost and what you get for that fee. Some banks offer a one-off monthly fee and within that all direct debits, standing orders, ATM withdrawals, transactions etc, are included. Others will charge you a small fee for each tap. It is worth looking at how you bank. Is the one-off monthly fee a better option as you tap regularly or do you hardly avail of that?

Another option to consider is how adaptable the bank account will be to digital facilities. With the recent connections to Apple and Google pay, are these important to how you bank? Many of these transactions are free so should be considered when comparing. The most obvious reason most people rarely switch their bank accounts is the actual switching process. Most of us have regular direct debits, payments; salaries are lodged, along with social welfare payments etc. It can be a daunting task to have to inform and co-ordinate these through the creation of a new account.

With the Central Bank switching code, the new bank will provide a switching service to you. They will help you with the entire process and will agree a time when activity on your account is less frequent to avoid any missed payments. The switching packs from the new bank will cover all areas. It is also a good time to review all the direct debits on your account and decide if they are still live and active or can be deleted.

Credit cards

Again, most of us have our credit card with our current account provider. It helps payments stay on track and accounts can be viewed online within the same site. Changing credit cards is not so daunting as current accounts and many providers offer great enticement to switch. Pay particular attention to introductory rates, balance transfers, the APR rate, and the cost of taking out cash on credit cards.

Savings accounts

As with all the products above, now is a time to look for a better home for your savings. Banks are not giving good rates on regular savings. There has even been talk of introducing negative rates for those with cash in savings accounts. If you have substantial savings, do you need access to it all immediately? Can you separate it into an emergency cash fund and diversify into other savings areas where the return is better?

With the departure of these high street banks and branches closing, it is clear that the future for banking is changing considerably. The need for a local branch is lessening and the digitalisation of all retailer’s services allow us to perform all our banking on our mobile phones or through the bank’s website. Remember, there is no immediate need to close accounts. You will be given sufficient time, so take that time to choose wisely.

Mr Paul Redmond (CPA,QFA, FAIA) is Managing Partner of RDA Accountants Limited. He is a member of the
Institute of Certified Public Accountants. He is also a Fellow of the Association of International Accountants and a qualified financial advisor.