How To Switch Banks

How To Switch Banks

 

Do you wish your bank was closer to your home or job, had lower fees, better interest rates, or more supportive customer service? If so, it may be time to consider switching banks if you already haven’t. 

 

Switching banks might be easy, but moving your money from your old bank account to your new one is a little more complicated. 

 

“Once you’ve chosen the right bank, the switch has to be done intentionally because there’s a lot of things that can go wrong,” Jason Reposa, CEO and co-founder of MyBankTracker, told US News My Money.

 

US News My Money explains how to switch banks the easy way.

 

Open Your New Account

First, you need to open a new account at your chosen bank or credit union. Most financial institutions let you do this online. All you need to do is complete the application and provide your name, address, contact details, driver’s license number, employment status, and anything else the bank requires. Once you complete this process, the bank will issue your new account information and debit card.

 

When you open a new bank account, you will need to put down a deposit. The amount can vary, but as Reposa noted, “I’m in favor of transferring enough that will cover rent and bills for a month. So, you know you’re covered for that month.”

 

Some banks provide a useful resource called a “switch kit” to streamline the transfer process and end your relationship with your previous institution. To find out if your new bank has one, contact customer service or do a quick Google search.

 

If you are only opening a savings account, your work ends at this step (as well as closing your old account). But if you’re transferring money to a new checking account, you’ll need to take a few more steps.

 

Cancel Autopay And Check For Outstanding Balances 

Review past bank statements and write down any bills or other charges you connected to autopay. A few things you should look for include:

 

  • Mortgage or rent payments
  • Utilities 
  • Gym membership
  • Credit card bills
  • Outstanding checks
  • Subscription services

 

Besides looking at your monthly expenses, take stock of quarterly, semiannual, or yearly payments, like:

 

  • Insurance
  • Sewage
  • Healthcare

 

Seeing all of your annual expenses at once can feel overwhelming, but it ensures you don’t miss anything.

 

Set Up Autopay With Your New Bank

Once you take note of everything, it’s time to set these expenses up with your new checking account’s autopay system. The process can vary based on whether you paid individual bills through your previous bank’s autopay system or the company’s payment portal. Double-check that you linked each charge to your new account. Also, don’t forget to track your bills for the first month or two after you switch!

 

Set Up Direct Deposits With Your New Bank

It’s just as crucial that you remember to set up direct deposits to your new account. To finish this step, you will need to submit a form from your employer. Keep in mind that it could take one to two months to work.

 

Connect Your Savings And Checking Accounts

Financial experts suggest that when you switch banks, connect your savings and checking accounts. This allows you to make automatic transfers between each account, which can be beneficial if you’re trying to build an emergency savings, a vacation fund, or some other goal. It also protects you from hefty overdraft fees if you accidentally overdraw your account.  

 

Leave Both Accounts Open

Because automatic payments and direct deposits may not take effect immediately, most experts suggest leaving your old bank accounts open for a minimum of two months. “Take advantage of letting them run in parallel for a little while to make sure payments you’ve transferred over are coming from the right account,” Greg McBride, Bankrate.com’s chief financial analyst, told US News My Money. 

 

Close Your Old Bank Account

After you set up everything, you can finally bid farewell to your old financial institution. However, some banks might not be as happy with the switch, so you might have a few more steps to take before you can close your previous account completely. This could include mailing a letter asking to close your account along with verification of your identity. If it’s possible, consider visiting your old bank and asking for specific requirements.

 

One thing to remember is that some banks charge customers who close their accounts. Also, make sure you properly dispose of any debit cards and checks connected to your previous bank. 

 

The last thing for you to do? “Get written proof and make sure it’s closed,” Reposa explained. “Many [banks] are good in sending it, but ask.”  

 

Source
  • Snider, Susannah. “How to Switch Banks: A Step-by-Step Guide.” U.S. News & World Report, U.S. News & World Report, 24 July 2018, money.usnews.com/banking/articles/how-to-switch-banks-a-step-by-step-guide.

 

Ian Schindler