How To Switch Banks

Ready to make the switch to a new bank? Follow these steps to switch bank accounts smoothly.

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

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.

Update your direct deposit details with your employer so that your earnings are routed to your new account. If you use an on-demand pay tool, switch bank details so you can access money when needed.

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.

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 in the new account.
• Request a cashier’s check or money order for your total funds to bring or send to your new bank.
• 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.

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 over the phone, via a written request, or in person. Ask whether the bank charges a fee for closing the account – some may do this 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.

Although switching banks isn’t an overly complicated process, transferring your money and updating all your direct deposits and automatic payments can take time. However, there are times when it makes sense to switch banks. Here are a few common scenarios:

• The new bank has a higher APY on its deposit accounts 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, consider asking whether your current bank will 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 to ensure you’re making the right choice.

• Fees: Before opening an account, 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. Look for options with no overdraft fees or minimum balance requirements.
• 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 ATM locations to withdraw or deposit cash into your account. You will likely be charged a transaction fee to use an out-of-network ATM.
• Customer service: You want your bank to be available anytime you need help. Look for banks that offer 24/7 customer service with multiple communication methods. Many banks offer online chat, phone, and mobile banking app communication.
• 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 from your phone. This takes away 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 allow you to set up recurring payments, ensuring you never miss a bill.
• Early direct deposits: Some options offer 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 your life easier and your finances more easily managed.

There are many reasons people want to learn how to switch banks. Some are reluctant to switch because they think it will take too much time and be a headache. However, the process doesn’t need to be overly complicated if 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.