Banking Loyalty or Hop Around

When it comes to banks or trading platforms people typically fall into two camps. There’s staying loyal and the other is shopping for the promotional deals whether that be points or cashback. I’ve seen these rewards recently from everything from mortgage renewal to cash desposits to trading platforms and there’s the OG credit card welcome bonuses. The question remains is it worth your effort.

The Case for Banking Loyalty

There’s a certain comfort in sticking with the same bank year after year. You know the app, you may recognize the tellers if you still go into a physical location for your needs, and you probably have your checking, savings, credit card, and maybe even your mortgage all under one roof.

Here’s why loyalty can pay off:

1. Simplicity and Convenience

Managing money across multiple institutions can get complicated. With one bank, you only have one login, one set of statements, and one customer service team. Everything feels streamlined, which can save time and reduce mental clutter.

1. Relationship Banking Perks

Banks like to reward long-term customers. If you’ve been with them for years, you may get easier approvals for loans, access to better interest rates on mortgages, or fee waivers if you keep a certain balance. Some even have “relationship tiers” that unlock premium services the longer you stay.

1. Trust and Familiarity

If you’ve had good experiences, there’s peace of mind in knowing how your bank operates. You don’t have to worry about hidden rules or shady practices—you’ve already learned the ropes.

1. Bundling Advantages

Having multiple accounts with the same bank can sometimes qualify you for discounts or perks. For instance, bundling your mortgage and checking account might shave a fraction off your interest rate. It doesn’t sound like much, but over 25 years, that could be thousands of dollars saved.

The Case Against Loyalty: Why Shopping Around Pays

On the flip side, staying with one bank forever can cost you. Banks often count on customer inertia—the fact that most people won’t bother to move their money even if they’re missing out on better deals elsewhere.

Here’s why shopping around can make sense:

1. Higher Interest Rates on Savings

Traditional banks often pay dismal interest rates on savings accounts—sometimes as low as 0.01%. Online banks or credit unions, however, can offer rates that are 20 to 40 times higher. Over time, the difference compounds.

Imagine you keep $20,000 in savings. At 0.01%, that’s just $2 in interest a year. At 4%, you’d earn $800. That’s a vacation, not a cup of coffee.

1. Lucrative Credit Card Rewards and Sign-Up Bonuses

If you’re willing to play the game, credit card sign-up bonuses alone can be worth hundreds (sometimes thousands) of dollars. Banks constantly compete for customers with cashback offers, travel points, and perks like free lounge access. A loyalist who sticks to one card might miss out on significant rewards.

1. Lower Fees and Better Terms

Newer banks or fintech apps often come with lower account fees, better overdraft policies, and more consumer-friendly tools. Meanwhile, your old bank may quietly raise fees year after year, hoping you don’t notice.

1. Keeping Banks on Their Toes

Shopping around encourages healthy competition. If customers are willing to move their money, banks are forced to offer better products and services. Staying loyal can sometimes mean accepting “just okay” options.

The Hidden Costs of Shopping Around

Before you start opening accounts left and right, it’s worth noting that shopping around isn’t free of trade-offs.

1. Time and Effort

Managing accounts across multiple institutions can be confusing. You’ll need to keep track of logins, remember where your money is parked, and ensure automatic payments don’t bounce when you switch.

1. Short-Term vs. Long-Term Thinking

Banks sometimes lure customers with flashy promos—like a six-month high interest rate or a juicy cash bonus. But after the promo period ends, the benefits might disappear, leaving you with an average account again.

1. Impact on Credit Score

Opening too many credit cards in search of bonuses can temporarily lower your credit score. While this usually recovers with responsible use, it’s something to consider if you’re planning a big loan like a mortgage.

1. Lack of Relationship Benefits

If you spread your financial life across too many institutions, you might miss out on “relationship banking” perks like better loan approvals or personalized support.

Striking the Balance: Loyalty and Flexibility

The truth is, you don’t have to be 100% loyal or 100% opportunistic. The smartest strategy is often somewhere in the middle:

1. Stay Loyal for Core Banking Needs

It makes sense to keep your checking account, bill payments, and mortgage with a single institution for simplicity and reliability. This also helps you build a long-term relationship with your bank.

1. Shop Around for Specialized Accounts

For savings, high-yield accounts, or credit cards, don’t be afraid to branch out. If another bank is offering significantly better terms, it’s worth parking your money there while keeping your day-to-day finances with your main bank.

1. Set a “Switching Threshold”

Decide what level of reward or interest rate difference makes it worth moving. For example, maybe you only switch savings accounts if you’ll earn at least $200 more a year. This prevents you from chasing every tiny deal and burning out.

1. Leverage Technology

Budgeting apps like Mint, YNAB, or Monarch can consolidate your accounts so you can manage them all in one place—even if your money is spread across different institutions.

1. Review Your Banking Setup Once a Year

Think of it like an annual financial check-up. Look at your accounts, fees, and interest rates. Are you still getting good value? If not, it may be time to shop around.

Final Thoughts

So, should you stay loyal to your bank or constantly shop around? The answer depends on your priorities. If simplicity and relationship perks matter most, loyalty can make sense. But if you’re looking to maximize returns, reduce fees, and grab the best deals, shopping around is the way to go.

The sweet spot is striking a balance—keeping your financial foundation with a trusted institution while staying open to opportunities elsewhere. That way, you get the best of both worlds: stability without leaving money on the table. This is the approach I take keep some accounts in a traditional account with a big bank as a just in case and also have a newer age higher reward or lower fee option.

At the end of the day, remember: banks make money off your money. Whether you stay loyal or shop around, the important thing is to make sure your banking choices serve you—not just your bank.

You can support me by:

• Subscribing to my YouTube Channel
• Using my WealthSimple referral link
• Simply continuing to read my weekly posts here.

Cheers ☕