There are many reasons you may need to switch banks. You may be moving to a new city or need to switch to a bank that’s closer to your current home or office. Sometimes people switch banks because the bank offers better interest rates or promotional incentives than their old bank. Regardless of the reason, it’s essential to understand the steps to take when transitioning to a new account. Banking can be complex and hard to navigate if you don’t have experience. Learn what to keep in mind when you’re choosing a new account and the steps to take to make the process easier.
Decide Where to Open Your New Account
The first step in switching bank accounts is determining where you want to do your banking. Take a look at the traditional banks and credit unions near you, and consider online banks if you aren’t satisfied with local offerings. Compare the options available for opening a new account. Each bank and credit union may have different minimum deposit requirements or fees for opening an account. Credit unions also have other requirements to become members, such as living or working within their community. You need to compare the features and benefits they offer, including:
- Interest rates on loans, mortgages, and savings accounts
- Having online or mobile banking services available
- Where their branches and ATMs are located
- Banking features such as mobile check deposit or automatic bill pay
- Fees the bank charges for other services
- Customer service considerations
- Other financial products and services available such as safe deposit boxes or American Express credit cards
You don’t have to limit yourself to a single bank. If you find a higher interest rate for savings accounts at one bank while better features for a checking account at another, you can open accounts at both locations. Always choose the financial institution that meets your needs the best.
Opening Your Account
Once you decide where you’d like to open your new account, you can choose to open your account in person or online. Opening a new account online takes only a few minutes and allows you to do it on your schedule. Whether you open your account online or in-person you’ll need the following information available:
- Your name and date of birth
- Your social security card
- An email address
- Your mailing address and phone number
- The number from your driver’s license or other ID card
The financial institution may also want additional information about your employment and will need to know how you plan to fund your new account. Usually, this means giving them the routing number and account number for your current account. Money from your current account will be used as the opening deposit of your new account. It may require linking your existing account to the new one through the bank or withdrawing funds from your current account and using it to open your new account in person. Once your new account is open, you will receive account information and a debit card if you’re opening a checking account. You’ll also have to enroll in online banking if your new account offers this. This requires setting up your online account username and password, including downloading the institution’s mobile app for your smartphone or tablet. If you open an account through an online-only bank, this is how you will conduct your banking. Once your account is set up, you can begin managing your finances.
Inventory Your Automatic Payments and Deposits
To switch banks without hassle, take an inventory of your current banking transactions. Make a list of automatic transactions or recurring payments from existing accounts, including:
- Automatic bill payments. These are bills you pay out of your account every month and may include student loan payments, your mortgage, utilities, or credit cards.
- Automatic deposits. Any deposit that gets directed into your current accounts, such as your paycheck or other income, government benefit payments, child support payments, and transfers from other linked accounts.
- Recurring payments. These include subscription payments to your gym or digital streaming services. Any payment that recurs monthly should be included.
Taking an inventory means a payment or deposit won’t slip through the cracks during your transfer. You’ll avoid the hassle of correcting a direct deposit or missing a bill payment. You may also want to note where your current accounts are linked online because they’ll need to be updated once you switch accounts. If you use a mobile wallet, the information there also requires updating.
Switch Information to Your New Account
Once your current account inventory is taken, and your new banking account is open, it’s time to switch accounts by redirecting payments and deposits.
Start with your deposits first. You’ll have to update your bank account information for each direct deposit you receive. You can then redirect your payments by setting up automatic payments using your new bank account. If your automatic payment was initially set up through a specific company’s billing tool instead of your bank account, you’ll have to update the banking details for each one. You can also set up recurring transfers during this time. If you previously had scheduled deposits for your checking or savings account, you need to update this information for your new accounts.
Order new checks, open cards, and other accounts
This is the time to order paper checks for your new checking account. You’ll also want to order and activate your new debit card. Take this opportunity to open other accounts at your new bank, such as a savings account or safe deposit box. Eventually, you’ll want to transfer the remaining funds from your previous account into your new one but wait to do so. Keep both accounts open and leave some money in the account you’re switching from for at least one complete billing cycle. This ensures that all your payments, deposits, and other transactions are carried over correctly. This also makes it easier to correct any mistakes or spot transactions you initially missed.
Close Your Old Account
Once you’ve completed the process of transferring financial transactions, the final step in switching bank accounts is to close your old one. How you close your account varies depending on your old bank. Be aware that some banks charge fees for closing an account. Some banks may require you to send your account closure request in writing, while other banks prefer in-person meetings to close your accounts. Other financial institutions may allow you to close your account online or over the phone. They may request proof of identification before closing your account as an additional layer of security. Get written verification from your bank that your account has been closed. You’ll need this in case a transaction accidentally goes through your old account or if a transaction triggers fees. Once your old account is closed, dispose of your old paper checks and debit card safely.
Switching Banks Offers Advantages
Even if you’re not moving to a new town, switching banks can offer financial advantages. You may need more financial services than your current bank provides, or you could get better rates on a mortgage or home loan if your checking account is with the same bank. A personal finance advisor can assess your financial needs and suggest ways you can improve your finances through banking options, investments, and more. Get more information about switching banks and setting up a new account from Finance is us. We help individuals understand the complexities around banking, mortgages, loans, and investing. Our goal is to give you the resources you need to make informed financial choices. Disclaimer: All content on this site is information of a general nature and does not address the circumstances of any particular entity or individual, nor is the information a substitute for professional financial advice and services.