There are several reasons why you might be looking to switch banks. Maybe you’re moving to a different city and need a bank that’s local, or it’s possible you’re looking for one with lower fees and better interest rates.
Whatever the case may be, switching banks is straightforward and easily done with the correct information. Consider this your “switching banks handbook” as it teaches you all of the steps for a smooth transition.
The process of switching banks
So, you’ve made the decision to switch banks. Now what? Well you’re going to need a little bit of time to get it done, but no worries! Most of the tasks can be completed within a day or two. You can be up and running with your new bank in no time.
To make it super simple, we’ve laid out the process of changing banks for you in 6 easy-to-follow steps.
Step 1. Choose a new bank
There are so many banking options today that it can be hard to choose where to move your money. The best place to start is deciding what features are important to you and your finances. Do you prefer an online bank with a mobile app, or a credit union that can provide low interest rates?
Make a checklist of what your non-negotiables are for a new bank when starting your search, and use it to help compare financial institutions. Here are some of the factors to think about when making a decision:
- Fees and charges
- Interest rates
- Minimum balance requirements
- Branch and ATM locations
- Customer service hours
- Bank reputation
- Online and mobile banking
- Automatic bill pay
- Mobile deposits
Review your options and go with your gut! Choose a new bank that best fits your needs to make your life easier and your finances more secure and organized.
Step 2. Make a list of your automatic payments and direct deposits
It’s a good idea to make a running list of your automatic transactions before opening your new account to see what you’re working with and evaluate your finances as a whole. You likely have automatic payments or direct deposits set up through your current bank to pay things, like bills or subscription services, or to put money into other accounts, like for investments or additional savings. When switching banks, it’s important to double-check that you’ve properly transferred those payments over to your new accounts so nothing gets lost in the transition.
Make a list of all the direct deposits, automatic payments, and transfers scheduled on your old account, including the amounts and dates of the transactions, as you’ll need to set all these up in your new account.
It may help to review your last few bank statements to make sure you’re not missing any automatic transactions you make on a monthly basis. For a seamless transition to your new bank account, pull up a year’s worth of transaction history to find all of these payments. This may take some time, but in the end, it’ll be worth it!
There are even mobile applications to help you through the process that will compile a list for you, such as Monarch and Truebill. They can track your spending for you — all you have to do is link your bank account! Once you have that list together, it’s time for the next step.
Step 3. Open your new account
Now that you’ve chosen a new bank, here comes the easy part: Open an account with your bank of choice. You may be able to open your new account online, although some banks might require you to visit their physical branch to make that move.
Either way, everything you need to open an account is similar whether you are on your computer or in person. You will most likely need to provide a few personal documents and information such as your:
- Photo identification (driver’s license, U.S. passport, or military ID)
- Social Security number
- Proof of mailing address or physical address
After you open your new account, you’ll have to fund it a little bit or make a deposit before moving all of your money over. Some financial institutions require a minimum amount to open or maintain an account, and some require larger balances for extra features like waiving fees. The required amount can vary depending on the financial institution and the type of account you open, so just be sure you’re aware of the requirements before you sign up.
Step 4. Move your money
Before closing your old bank account, be sure to withdraw all of your funds and move them to your new account. There are a few different ways to get this done. You can either withdraw your money in cash and deposit it in the new account or request a cashier’s check or money order of your total funds to bring or send to your new bank. Or, you may be able to transfer money online from the old account to the new one, however some banks will charge a fee to do this.
Make sure you leave enough money in your old bank account to cover any pending transactions or automatic payments before taking the entire amount out.
Step 5. Update your automatic payments and direct deposits
Now that your new account is open and your funds are moved over, you’ll need to transfer all of your automatic payments and deposits over too. Use this time to get rid of old subscriptions and services you don’t use, and save yourself some money that can be used instead for an emergency fund or high-yield savings account.
Once you’ve decided what you want to keep and what to cancel, you’re now ready to update your account information. Visit the billing or payment center for each service or product, remove your old bank account information, and enter your new account numbers. If you stumble into any problems, reach out to the company’s customer service department to resolve the issue.
Also, be sure to work with your employer to change your paycheck details if you use direct deposit in order to be sure your hard-earned money routes to your new account.
Step 6. Close your old bank account
Now it’s time to say goodbye to your old account. But, not so fast. First, make sure all of your automatic transfers are cleared with your new account
When it comes to closing the account, you may have a few options, including doing it over the phone, in a written request, or in person. Be aware your bank probably doesn’t want to lose you as a customer and may try to talk you out of leaving. Once you close your bank account, make sure you ask for formal written verification that the account is closed.
Also, be sure to ask your bank if there are any fees to close your account. Some banks may charge you a fee for closing your account too soon after you opened it.
After your account is closed, destroy your debit cards and checks connected to that account. However, keep your bank statements for your records! You might need them later for your taxes.
How do I find the best bank for my finances?
The only way to figure out what bank will work best for you is by evaluating the features of different banks and what they offer, and then comparing these to your priorities. Conduct some research online or visit a physical branch to learn the ins and outs of a bank’s services and products. Once you feel like you’ve got all the right information, make an intentional decision to make the best move for your money.
Does switching banks affect your credit score?
No need to worry. Changing banks doesn’t affect your credit score. As long as you don’t apply for a new credit card at the same time you’re opening your new account, you’re in the clear!
When is the best time to switch banks?
There is no set-in-stone answer for when to switch banks. Sometimes, it depends on your circumstances, like if you are moving or trying to save money on bank fees or with your interest rates. If you’re not in a rush, the best time might be the first of the new year for a fresh start! Do what works best for your schedule and finances.
Final thoughts: Why switch banks?
There are many different reasons why people switch banks. Some people are reluctant to switch banks because they think it takes too much time and will be too much of a headache. This guide helps make it easy and gives you all the information you need to switch things over. If you aren’t happy with your current financial institution, switching to a new bank will make it worth it in the long run.
Switching banks can have a lot of benefits, such as lower fees, more banking features and products, a better ATM network and branch locations, or a mobile application. Again, most banks will try and get you to stay and ask why you’re leaving. That’s okay! Give them an honest answer. Lastly, before leaving, double-check that your funds are removed and that the account is officially closed.