Sometimes not knowing how to make the transition is the only thing stopping someone from switching bank accounts. Thankfully, moving banks is straightforward if the process is divided into manageable chunks.
Make your switch to a new bank as quick and painless as you can by using the below checklist.
Decide on a bank
If you haven’t chosen a bank yet, focus on those that provide the type of account you want, whether it’s a checking, savings, or money market account. Review the fee schedule and bank features in detail after that, as well as any online bank customer reviews. You can pick from institutions like:
Big banks and neighborhood banks are examples of traditional banks, which are physical, brick-and-mortar establishments. They frequently, but not always, charge more than credit unions and online banks.
Credit unions: These are member-owned organizations that function much like banks, but they are nonprofits, and members may gain advantages from that through benefits like more lenient fee schedules and better interest rates.
Online banks: These financial institutions usually don’t have physical locations that you can visit. They compensate for a lack of physical presence with lower fees and higher yields.
Note
Find a bank that focuses on the services that are most important to you in banking by first deciding what those services are. Whatever you’re looking for, there’s probably a banking institution that offers it. Whether you want a high-interest savings account, easy access to a variety of financial services like credit cards, auto loans, and mortgages, or a convenient app.
Establish a new bank account
The sooner you activate your new account, the better. Before you have somewhere to go, you cannot change banks.
It usually takes 10 minutes or less to open an account online, which is a small step. Make an opening deposit into your new account (some banks have a minimum opening deposit requirement), let the funds clear, and then verify that they have arrived in the new account. To make changing bank accounts simpler, use these account opening suggestions.
Take the lead
Open your account a week or two or more before you intend to make the final switch. This is because receiving your new debit card by mail may take several business days. You can also set up your online account and create your login information at this time in order to access the bank’s website. Before switching to using your new account exclusively, make sure you have your debit card on hand and have set up all of your online accounts (including any apps).
All forms must be provided
To enable wire transfers or other features of your new account, some banks may ask you to sign and mail back forms. You can use all the features of your new account right away if you promptly return these forms.
A connection to the old account
The new account and the one you want to close should be connected electronically. The simplest and least expensive way to transfer money is this. You’re in luck if both the new and the old banks use a person-to-person mobile payments platform like Zelle because that’s typically the quickest way to transfer money for no cost.
Find out about the bank’s resources for switching accounts
Some banks provide account switching services to alleviate your burden of account switching. Your automatic payments and direct deposits, for instance, might be transferred by the bank, and it might even inform your previous bank to close the account. To make the switch as simple as possible, it is worth asking your bank about their account switch services.
Note
Even if your bank doesn’t provide this service, they might still provide a switch kit. All the necessary details, including your new account and routing number for direct deposit forms, will be included in this information packet to help you complete the switch.
Determine Monthly Expenses
Before switching banks, make a list of all the bills you automatically pay from your bank account. Prior to canceling those payments and setting up your new account to pay for them, you should not close (or empty) your old bank account.
To ensure that nothing is overlooked, you might want to temporarily switch to paper bills. You can still use the old account to pay bills online, but you must “push” the funds out of the account yourself rather than letting your service providers “pull” payments for you. During the transition, make use of the following advice to prevent missed payments.
Utilize your new account right away
Start writing checks from the new account if you’re going to write checks or use online bill payment to establish a routine. Transfer money from your previous account to cover those payments.
Recognize Payments on Previous Statements
If there are any upcoming payments that are typically billed less frequently, make sure to account for them by going over the entire year’s worth of transactions in your old account. The statement from the previous month is insufficient, and the absolute minimum is three months. Certain payments—like life insurance premiums, for instance—may only be made once a year or every three months. Other payments, such as PayPal drafts from your checking account for infrequent eBay purchases, may only occur occasionally.
Note
Make a list of every expense you incur and cross each one off as you arrange to have your bills paid from your old bank account to your new one.
Your Income Should Be Redirected
Ask your employer to update payments to the new account if you have direct deposits going into your old account. Once more, be aware that it may take a few times before you’re done switching banks to transfer money between your old and new accounts (possibly by check or electronic transfer).
For payments to be transferred to a new bank account, it might take several pay periods or billing cycles. Establish your schedule in accordance with the length of the process by asking your employer.
Make sure to take into account all of your income sources, including:
- Social Security advantages.
- Income from pensions and annuities.
- Gains from investments and regular payments.
Connect the New Account to Existing Accounts
Utilize the mobile app or website of your new bank to connect your new checking or savings account with all of your other active accounts. To make reaching your financial objectives easier, this step enables you to make one-time or recurring transfers from one account to another.
For instance, linking accounts enables you to plan automatic transfers from a checking account to a retirement account or emergency fund.
Schedule a Day to Make the Change
You should carefully plan the day you want to switch over your money, direct deposits, and bill payments because switching bank accounts involves a lot of moving parts. A missed automatic bill payment could result in an overdraft fee if you aren’t careful, and you might not leave enough money in the old bank account.
To lessen potential harm, keep a small sum in your old account. It’s okay if you have to keep your old account open for a month longer than you had intended. Paying from the previous account is preferable to skipping or paying after the due date. Particularly with loans, making late payments can result in penalties and even lower credit ratings.
Poor timing when changing bank accounts is the cause of many mistakes. Plan your day so that finishing the switch will coincide with crucial planned transactions. Look through your transaction history to find a date that will give you plenty of lead time. For instance, if you don’t have any automatic transactions between the second and the 12th of every month, change everything on the second so that your service providers (such as your electric company, mortgage, and insurance) have time to update your account information before the next payment is due.
Continue to use your old account
Keep your old account open as long as possible. Direct deposit and automatic billing instructions updating might take longer than you anticipate. A month or two should pass before assuming that everyone is using your new account information.
You’re probably eager to close your account if you’re switching banks because of fees. But if you’re switching for another reason—like a move across town-it’s best to keep your old account open for a few more months.
Check your checkbook one last time to make sure there are no pending checks or forgotten electronic payments in your old account before closing it.
Make the old account empty and closed
Withdraw any remaining funds after all anticipated debits and credits have cleared in the old account. If it’s a small amount, you can do this in cash or by requesting a cashier’s check. Because you might not be able to process a personal check before your bank closes the account, doing so is less secure. Put it on the record, either way. Inform the bank in writing where to send any money that is still in the account, and instruct it to stop processing statements, producing interest payments, and charging fees.
Closing the account completes the process of changing banks. Online account closure is a possibility with some banks. If yours doesn’t, get in touch with the bank and ask how to permanently close the account. The majority of the time, you can call or write to request account closure, but there might be extra steps for joint accounts. Your account has successfully changed banks once the bank confirms that it has been closed.
FAQs, or frequently asked questions
How simple is it to change banks?
Even though switching bank accounts is simple, you must coordinate your new and old accounts with all of your incoming and outgoing funds. You could overdraw one of your accounts or cause a transaction to bounce if you omit any of the process’s steps. The process should be carefully planned out, and you should keep a close eye on your accounts.
When is the ideal time to switch banks?
It depends on what you want out of your banking experience in the end whether switching bank accounts is a good idea or not. You might want to consider other options if you find that you’re paying a lot in fees, getting poor yields on your savings accounts, or lacking contemporary features like mobile deposit.