How to Switch Banks

Here are a few common reasons to move to another bank:

• The new bank has a higher APY than your current bank.
• The new bank has lower fees than your current bank.
• Loan options at the new bank are better, and borrowing money will cost you less.
• The new bank has a generous bonus offer for opening an account.
• Your current bank’s ATM network is less extensive than the new bank’s.
• You want to be able to bank in person at a local branch, but yours doesn’t have any.
• You want to ditch your brick-and-mortar bank in favor of an online-only bank.
• Your current bank’s customer service is unreliable or unhelpful

Before switching, ask your current bank whether they can lower your fees or if they offer deposit accounts with a higher APY. Your bank may be willing to work to keep you as a customer.

Changing banks shouldn’t be a spur-of-the-moment decision. Before choosing a new bank, consider the following factors.

• Fees: Check whether the bank charges monthly fees and if you can avoid them by maintaining a minimum account balance above a certain amount. There may also be ATM and overdraft fees associated with the account.
• Interest rates: When opening a savings account, look for banks that offer high-interest or high-yield savings accounts to help you save more money for the future. Ask whether the bank offers an interest-bearing checking account.
• Minimum balance requirements: Some checking and savings accounts require you to maintain a minimum balance. If your balance dips below this threshold, you may be charged an account maintenance fee.
• ATM locations: Check that the bank you choose has convenient in-network ATM locations for withdrawing or depositing cash into your account. 
• Customer service: Look for banks that offer 24/7 support across multiple channels, including online chat, phone, and in-app support.
• Security: Your checking and savings accounts should be encrypted with two-factor authentication for password recovery and when logging in from a new device.
• Online banking options: Explore bank accounts that can be easily managed on your phone, eliminating the hassle of managing your finances in person.
• Automatic bill pay: Forgetting to pay your bills can result in late fees or penalties, which can harm your credit. Accounts with automatic bill pay let you set up recurring payments, so you never miss a bill.
• Early direct deposits: Some bank accounts have early direct deposits, so you can get paid earlier

Review your options and trust your instincts. Ultimately, you’ll want to choose a bank that makes both your life and your finances easier to manage.

Ready to make the switch? Here’s how to change banks in five simple steps.

Step 1: Open a new bank account

First, choose the bank or credit union where you want to open your new bank account. Need some guidance? Read up on how to choose a bank that fits your needs.

Once you’ve chosen your new bank, you can open an account online or over the phone. Some banks may require you to visit a physical branch if one is available.

Each bank or credit union has requirements for opening an account, including:

• First and last name
• Photo identification (driver’s license, U.S. passport, or military ID)
• Social Security number
• Birthdate
• Proof of mailing address or physical address
• Email and password

Step 2: Update your automatic payments and direct deposits

List your current automatic payments and direct deposits, including:

• Paycheck
• Monthly bills
• Subscription services
• Savings contributions
• Investment contributions

Cancel subscriptions and services you no longer use. Instead, consider using the money to build an emergency fund in a high-yield savings account. Update your payment information with each service or product you plan to keep.

Finally, update your direct deposit details with your employer so that your earnings are routed to your new account.

Step 3: Link your savings and checking accounts

Link your new checking and savings accounts to transfer money between accounts as needed. You can also set up automatic transfers to help grow your savings faster.

Many banks offer overdraft protection, which transfers funds from a savings account to a checking account to prevent overdrafting. Opting into this service helps you avoid overdraft fees.

Step 4: Move your money

Next, move your funds to your new account. There are several ways to do this:

• Withdraw your money in cash and deposit it into your new account.
• Request a cashier’s check or money order for the full amount, and either bring it to your new bank or send it there.
• Transfer money online from your old account to your new one. Some banks may charge a fee for this service

Leave enough money in your old bank account for several months to cover any pending transactions or outstanding automatic payments. This prevents accidental overdrafts and late fees.

Step 5: Close your old bank account

Before closing your old bank account, verify that all automatic transfers have correctly switched to your new one. If everything looks good, you can proceed with closing your old account.

Depending on your bank, you can close your account by phone, by written request, or in person. Ask whether the bank charges a fee to close the account – some banks may do so if the account was recently opened. Request a formal written verification letter of the account closure for your records.

Once your account is closed, destroy your debit card and checks. Keep your bank statements, which you might need as part of your tax documents checklist when you’re preparing to file your taxes.

Switching banks can lead to better savings rates, lower loan or credit card interest rates, and fewer fees. But it’s not always the best choice. Here are some potential downsides of switching banks.

• The process can be time-consuming. Between researching your options and switching your deposits and withdrawals, switching banks can take a while. If you don’t have much spare time, it might not be worth it.
• You may undergo a credit check. Most financial institutions don’t perform a credit check when you apply for a deposit account, but they will if you’re also applying for a credit card.
• You could overdraft your account. If you forget to update your automatic payments, you might not have enough in your account to cover a bill, which could result in fees.
• There might be hidden fees. Make sure you read the fine print to see whether your new bank charges overdraft, ATM, or monthly maintenance fees. 
• You could fall for a scam. If you find an account at an unknown bank that seems too good to be true, do your research before giving out any information. Use the FDIC’s BankFind tool to verify a bank’s name, website, and other information.

Switching banks isn’t overly complicated when you follow the steps outlined in this guide. If you’re unhappy with your current financial institution, switching to a new bank will be worth it in the long run.

Not sure what type of account to open? Learn about the four must-know types of bank accounts.