Will Switching Banks Affect My Credit Score? Busting Green Banking Misconceptions

Let’s face it, banking is a subject that most people would rather not have to deal with. It can seem complicated and messy just to do the simplest tasks, but it doesn’t have to be. Switching from a dirty bank to a green bank is a great way to help our planet, but there are some things you should keep in mind as you make the switch. So let’s clear up a few of the common misconceptions about green banks and learn how good finance can also be good for the planet! 

Switching to a greener bank is easy. 

Switching banks might sound like a hassle, but it doesn’t have to be! If you want to do something good for our planet but are terrified of paperwork (like most of us), we have your back. First, check out our handy tool to help you find a green bank that fits your needs. Once you’ve found one you like, head over to our step-by-step guide that will walk you through the steps to switching banks.  

Your money is just as safe at a green bank or green credit union as it is at a dirty bank. 

Regardless of their size, green banks in follow the same regulations as dirty banks.  Green banks not only insure your deposits for the same amounts as dirty banks, but they are also working towards a more sustainable future for us all. Some countries allow “non-bank” institutions to provide accounts that aren’t always insured, so if this is important to you, you can filter by “deposit protection” in our sustainable bank finder.  

With an insured green bank, you can rest easy that your hard-earned money will be safe while you help secure a more sustainable future for our planet.   

Green banks have ATMs near where you live (or they’ll reimburse you for using out-of-network ATMs). 

What if I told you that you would never have to worry about paying ATM fees… ever again! Many green banks will allow you to take out money from any ATM without a fee. On top of that, they’ll even reimburse you if the out-of-network ATM charges a fee! That way, you can just head over to whichever ATM is most convenient. Though there is usually a limit on how much they will reimburse, it should be enough to cover multiple withdrawals per month.  

Just check the box next to “free ATM network” in our sustainable bank search tool, and you’ll be on your way to ATM liberation. 

Switching to a green bank won't affect your credit score (so long as you prepare). 

Opening a new account at a green bank doesn’t necessarily mean your credit score will be affected, but there are a few things to consider as you get ready to make the switch: 

• Opening a new savings account doesn’t usually affect your credit score. Opening a checking/current account shouldn’t affect your score by itself. However, adding overdraft protection may result in the bank doing either a “soft” or “hard check” on your credit report and too many hard checks can cause your score to temporarily dip.  
• Be especially careful about automatic bill pay when closing your old accounts. If you forget to change anything over to your new bank before you close the old, there is a possibility the biller will report you to the credit agencies for having an unpaid bill. Fear not though! We’ve put together a step-by-step guide that will help you make the switch to a green bank without leaving any loose ends. 

Closing and/or opening a credit card account can potentially affect your credit, so keep an eye on these common issues: 

• Opening a new credit card account usually requires a “hard check” on your credit report and this can result in a temporary decrease in your score.  
• Closing your oldest line of credit can cause your score to dip until your other accounts mature. However, this usually isn’t as important as other factors such as paying your bills on time. 
• Changing your credit utilization ratio (the amount of your credit limit that you’ve used when the bill comes due) can also affect your score. Assuming your spending habits stay the same, if you open a new account with a lower credit limit and close your old one, your score might go down. Often though, your score might have gone up since the last time you applied for a credit card at your dirty bank, so you might qualify for a higher limit at a green bank. This can mean your credit utilization ratio improves and your credit score goes up!  

Green banks offer credit card rewards, too. 

This mainly applies to those of you banking in the US, but wherever you are, you should know that compared to dirty banks, many green banks come with either similar or even unique perks. At the end of the day, you shouldn’t have to give something up for doing the right thing with your money. 

Many green banks offer comparable credit card rewards like cash back and other savings that you’re familiar with. Savings accounts from green banks also offer interest rates that are similar to other banks. 

But wait, there’s more! Many green banks offer perks that allow you to round up your purchases to help the environment or other charities. Planting a tree with every swipe of your card? Now that’s banking green.