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How to Switch Banks

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Changing banks may seem like a time-consuming hassle with little gain, but it’s actually a straightforward process. After all, there are lots of good reasons to switch banks. You may be able to get a lower monthly fee, better access to ATMs and branches, higher interest rates for your savings, reimbursement for fees from non-network ATMs and better online and mobile banking options. Unsatisfied with your bank’s fees or customer service? Think the grass might be greener elsewhere? It might be time to learn how to switch banks.

Main Takeaways: How to Switch Banks

  • Select a new bank. Look for options with local ATMs and excellent mobile services.
  • Collect personal documents. Be prepared with the correct documentation when you go to sign up for a new account.
  • Apply for your new account. This involves a physical trip to the bank or applying online.
  • Transfer your initial deposit. Open your new account by putting starting funds into it through a check or cash deposit.
  • Reroute your incoming funds. Have a direct deposit set up for work? Make sure to direct those funds into your new bank account.
  • Close your old account. After everything has been moved over, don’t forget to close your old account with your bank.

Step 1: Decide on a Bank

Most banks charge you a fee to use another bank’s ATM, so a bank with many local ATMs is a good choice to look out for. Look for easy-to-use online banking and mobile banking apps from your bank, as well as features like mobile deposit and online bill pay.

Online banks usually have robust online and mobile banking capabilities which allow you to deposit checks through an app and may reimburse you for using another bank’s ATMs.

Depending on your needs, you may be looking to open a checking or savings account. A checking account allows you to write checks, use your debit card and withdraw cash to spend the money in the account, usually an unlimited amount of times per month as long as you have funds available.

Savings account rates are generally low, around 2% APR, and the best rates often happen with online savings accounts. Many savings accounts also allow you to open several linked or sub-accounts where you can divide the money into specific savings goals, such as saving for a new car or vacation.

Most accounts, either checking or savings, have monthly fees, usually $5 or $7, but if you keep a minimum amount in the account or have your paycheck automatically deposited, fees are usually waived.

Your account will be FDIC-insured up to $250,000 per account holder, per financial institution. That means if you have $250,000 in checking and savings accounts at one bank and $100,000 in accounts at another bank, all $350,000 is insured by the FDIC.

Step 2: Gather Your Documents

Once you’ve selected a bank, you’ll need to gather the required documentation. At a minimum, a bank will need to see your driver’s license or alien identification card, your Social Security number or individual tax identification number, address, phone number, occupation and other basic contact information.

You will need to sign a signature card and might even need to give your fingerprint, depending on the bank’s policy.

Step 3: Apply for a New Account

To open your new account bring your documents and initial deposit to your nearest branch. Opening an account at the branch will probably take around 30 minutes, depending on if you have to wait for a banker to assist you.

The opening process could take a couple of days if you choose an online bank for your account to upload and verify your identification documents.

Have a history of leaving accounts overdrawn or a bad banking history? Banks may blacklist you and deny you an account. A negative banking history may require you to apply for a second chance bank account so you can rebuild a positive banking history with a limited-use account.

One account we recommend is a savings account by Credit Karma. They offer one of the highest APYs in the market and have no account minimums and absolutely no fees.

Step 4: Transfer Initial Deposit

You’ll need either a check, cashier’s check, money order or cash for your deposit. Your initial deposit can be small, often $25, to open the account. A cashier’s check is a special check issued by your bank with verified funds so it acts the same as cash.

The money will be available right away in your new account. If you write a check from your old account, funds could be on hold for up to 9 days.

It’s easy to wire your initial deposit from your existing account. The funds may take up to 3 days to be available as they are still subject to new account holds. You may be able to mail in a check or money order for your initial deposit but that will take longer for the deposit to arrive and clear.

Step 5: Transfer All Incoming Funds

Contact your human resources or payroll department to change your bank account for your payroll deposit. Do the same for any other electronic deposits you may receive, including investment accounts, government benefits, tax refunds and child support payments.

You will also want to update your Paypal, Venmo and other electronic payment accounts to link to the new account. For the next several months, be sure to double-check the banking instructions for any incoming funds transfer you receive to make sure they go to your new account.

Step 6: Get New Services Set Up

Transfer all your monthly automatic payments to your new account, including your mortgage/rent, utilities, insurance, cellphone, cable, internet, gym membership, video streaming service and any other subscriptions you may have.

Look through your budget apps and your old bank statements to see where you may have quarterly or annual debits from your account. Be sure to update any automatic transfers to or from savings, if applicable. Make a list of all your monthly automatic debits and any scheduled online bill payments, then work down the list to make sure you don’t forget to update anything.

It may take several days for your debit card for your new account to arrive in the mail. Don’t forget to order checks for your new account, sign up for online banking and download the bank’s app. Don’t forget to transfer any other services you may have at your old bank, such as your safe deposit box or any savings accounts you wish to close and transfer to another bank.

Step 7: Close Your Old Account

You’re now ready to close your old account. Double-check that you don’t have any outstanding checks on the account or recently-swiped debit card transactions that haven’t yet posted.

Stop using the account for several days as you switch over to the new account and check your receipts to ensure that your purchases have cleared. You can transfer most of the money from your old account to your new one at any time, but if you have an outstanding check or debit card transaction, be sure to leave enough money in the account to cover that transaction and wait until it clears to close the account.

The safest way to move your money to your new account is with a cashier’s check, personal check or wire transfer, but you can withdraw cash if you have a local branch of your new bank. The method you choose to transfer your money is up to you and is based on the amount you have to transfer, bank policies, fees and how soon you need the funds.

Even if you have transferred all the money out of the account, be sure that you close the account. You can do this in person at a branch and some banks may even offer this service online.

Closing Notes on How to Switch Banks

Changing banks involves a little planning and a few simple steps, and in most cases, the hardest decision you will have to make will be deciding which account to open.

Need help finding a new bank? Check out Benzinga’s top picks for the best checking accounts, best savings accounts and best online savings accounts.