Switching banks can be a daunting task, but it can also be a great opportunity to find a bank that better meets your financial needs. Whether you’re looking for a better bank or just need a change, you will probably face this change at some point. The good news is that switching banks can be pretty painless. By following these tips, you can find out how to switch banks and start enjoying the benefits of your new bank.
Reasons to switch banks
You might think about switching banks because of life changes or you need a change in services. You may have moved to a new state and need to find a new bank. If you are recently married, you may switch banks to open a joint account with your spouse.
You can also switch banks if you want to save money on bank fees. Perhaps you want to change banks because you are unhappy with your bank’s customer service or lack of mobile features. Other times, you may switch to a bank that has a branch closer to your home.
Steps for switching banks
Changing banks is a fairly simple process when you follow a few steps.
Step 1: Find a bank
Choosing the right bank for you often depends on the features and fees the account offers.
Traditional banks and credit unions may be suitable if you like the comfort of visiting local branches. Or, you may prefer the features of an online bank, such as mobile check deposits and bill payments.
Financial factors are worth considering as well. Look at the fees you may be charged and if you must keep a minimum balance in your account. Find out what rate you will get if you open a savings account. You may receive a special incentive to switch banks.
Step 2: List your automatic deposits and payments
Automatic deposits and payments make life easier. But when you switch banks, automated transactions can bring added stress if you don't plan properly. Making a list of automatic deposits, such as your paychecks, benefit checks, or business income, is helpful. You should also list bill payments, subscriptions, or transfers that come out of your bank account automatically.
Switching banks is a good time to review your automatic bill payments, subscriptions, and transfers to see if there are services that you don't use and should cancel.
Step 3: Open a new bank account
Once you have picked a new bank, find out how to open your new account.
If you choose a traditional bank or credit union, you can open an account by visiting the branch. Banks usually require identification, such as a driver's license, social security number, and proof of residence, such as a utility bill. Bring a check or cash, as banks typically require a minimum deposit to open an account. When you open an account at a brick-and-mortar bank or credit union, you should also set up online banking and mobile features while you are there.
Online banks typically open your account online. However, you should expect to supply identification, such as a driver's license and social security number, electronically to the online bank.
If you plan to link an account to put funds into your new bank account, you may face a slight delay. To verify that the linked account is yours, an online bank makes test deposits into your old account. Once you have confirmed the deposited amounts, you can link your account and transfer funds to your new bank account.
Step 4: Update automatic deposits and payments
When moving banks, you want to ensure that automatic deposits or payments have your updated banking information to avoid interruption. As soon as you open your new account, start working through your automatic deposits and payments list to update your banking information.
Step 5: Close your old bank account
Once you are comfortable that your automatic deposits and payments have been switched to your new account, you should close your old bank account. You should destroy checks or debit cards associated with your old bank account.
Some banks charge a fee to close your account, so just be sure you have enough money in the old account to cover this. It would help if you asked the bank to send verification when your account is closed. Then, if the bank accidentally puts through an old recurring transaction and hits you with a fee, you can prove that your account has been closed.
What to know about switching banks
Switching banks involves moving your money from one bank to another.
Review your new bank’s policies
Before you change banks, you should thoroughly review the bank’s policies. Make sure you understand the fees you pay and if you will incur penalties if you don’t keep a minimum balance in your account.
Consider timing
Electronic deposits and payments can take time to transfer over. Keeping a little money in your old account is helpful. You can close your old account once you are comfortable that your automatic deposits and payments have transferred over.
Double-check your information
Make sure your personal and banking information are correct. Verify that the bank has correctly listed your name, address, and identifying number. You should also make sure your new bank account lists all the owners.
Make Switching Banks Stress-Free
Switching banks sounds complicated. The good news is the process is much easier than it seems. With a bit of planning and preparation, you can transfer banks relatively stress-free.
Frequently Asked Questions
How easy is it to switch banks?
Switching banks is a simple process. Choose a new bank, open an account, move your automatic debits and credits to your new account, and close your existing account.
Does switching banks hurt your credit?
Switching banks is a simple process that doesn’t impact your credit score.
How do I transfer a payment from one bank to another?
Once you link your old bank account to your new one, you can transfer payment between banks.