Last Updated: May 31, 2021
If you’re unsure how to switch banks, stay tuned because we’re about to tell you everything you need to know. You may need to switch your primary financial institution for a number of reasons. Awful interest rates, not enough ATMs in your area, or something as elementary as bad customer service can all be good reasons for changing your bank.
How to Switch Banks
Having the right information will definitely help you. Keep on reading to find out how to make changing banks a trouble-free process.
Choose a new bank
In order to change banks, you’ll need to figure out which type of bank you want to use. Do you like classic brick-and-mortar banks, or are you someone who prefers online banking? If you’re not sure what to pick, we’ll break down some of the features of both.
Initially, you’ll have to decide between a traditional bank or a credit union as your brick-and-mortar bank. If you have bad credit and are looking for specific banks that will accept you, check out our article on the best online checking accounts for bad credit.
Traditional banks generally have higher fees, lower APY (annual percentage yield) for savings, and don’t offer many features online. This doesn’t apply to all traditional banks, so when changing bank accounts, it’s best to be careful and take your time while doing research. On the other hand, credit unions are institutions that offer similar financial services to commercial banks, but they’re not-for-profit and are fully controlled by their members. However, their access is usually limited to a specific community.
Online banks usually offer lower fees, higher APY for savings, fast account opening process, but don’t have branches, so everything is remote. In contrast to traditional banks, online banks may not have as many ATMs and may charge some fees for their ATM services. Customer service is pretty important when you’re account switching. Online banks do it virtually, whereas traditional banks offer physical customer service too.
Another thing that can affect your choice of banks is incentives. Some banks provide incentives to customers who are switching banks. They come in various forms, such as cash, cashback, percentage interest, and even physical rewards.
Open a new bank account
After choosing your desired bank, the next step is opening a new account. It’s important to save any previous bill payments, so they don’t get lost in the shuffle. You can do this any way you want, whether it’s an online list or paper statements.
With this out of the way, your next step is creating a checking or savings account, depending on what you’re interested in. Online banks deal with the account creation process faster since you only need to submit documentation online without any wait. On the other hand, transferring a bank account with traditional banks will take more time as you might need to go to a branch and wait for a while. Fortunately, some traditional banks allow you to take care of some account opening procedures online, too — not just in person.
Here’s what you’ll usually need to bring when opening a new account:
– Proof of identity (government ID/passport/driver’s license)
– Social security number
– Utility bill with address information
– Proof of school enrollment (for students)
Furthermore, some banks require a minimum amount of cash for opening an account, so you’ll need to make an initial deposit.
Change your direct deposit
In order to understand how to change banks, you’ll need to learn how to change your direct deposit. You can do this by informing your employer and providing any necessary documentation. That way, you won’t end up wondering where your salary has gone.
Set up automatic bill payments
The next step is managing your financial transactions, specifically, setting up automatic bill payments. In a fast-paced world where technology plays a huge role in our life, automatic bill payments are a must. You’ll need to do this when you switch bank accounts to keep everything running smoothly.
You need to be extremely careful while doing this and not miss any important transactions. It is also a good time to analyze all your current subscriptions or other unimportant payments. Doing this will help you decide whether you want to keep using specific subscriptions and services or just get rid of them.
Update linked accounts
If your old checking account was previously connected to other accounts you own, such as a retirement account, make sure to update it when switching banks. This will help you make recurring transactions between your accounts a lot easier. You can update your linked accounts on your new bank’s website or mobile app if they have one.
Close the old account
Before closing your old account, it’s advisable to keep a small amount of cash if you think any bills may hit it. This will also come in handy if there are any other payments that you might’ve forgotten. So, always be on the lookout for upcoming or scheduled transactions affecting your old account.
When changing bank accounts, transferring money from one to another is easy — the process just depends on how fast you want it done. You have a few options: electronic payments and checks are your cheapest option but are the slowest, whereas a wire transfer is quick but costly.
Furthermore, it may take some time to update information such as direct deposit and automatic payments and make sure they’re connected with your new bank account. For this reason, you should wait at least a month or two to ensure everyone has your new bank information and transactions don’t get lost.
When everything is out of the way, you’ve paid every remaining bill, and every transaction is completed, you’re ready to close your account. Some banks carry this out strictly in person at a branch, by submitting a request, and on the phone. A direct bank (online bank) deals with this process solely online. For closing an account, you’ll need official documentation from the bank.
After switching bank accounts, you may see your old account open again. Banks might do this without informing their client if a check or other payment you did not think of come through. To avoid it, you need to specify in your request that you want to close your account when every direct deposit and automatic payment have been transferred.
With this finished, you’re done with the process of switching accounts, and you’re all set.
After reading that, you should know how to switch banks. It’s not a complicated process, but it requires a lot of patience and keeping a keen eye on what’s going on with your old account. You’ll also need to switch your automatic bill payments and direct deposits onto your new account. With no pending transactions in your old one, you’re ready to close it.
You definitely can. Most banks will allow you to do the full closing procedure online, and for those that don’t, you’ll have to visit a branch of theirs. Just make sure that your account is clean and there are no unprocessed transactions.
It depends, but generally, the answer is no, you don’t need to change bank accounts. Most banks have branches all over the country, and as long as there’s one near your location, you’re set. However, if you’re a brick-and-mortar person and there are no branches of your current bank at your new location, then you should consider switching. Whereas, if you’re doing your banking at an online bank, you don’t have to.
It’s generally easy to switch banks. It only takes a couple of days and submitting proper documentation. Cleaning your old account of any payments and deposits in advance will make this process much faster.
You’ll want to know how to change banks faster to get things in order quicker. It takes around 7–10 working days to switch an account, depending on the bank. If the bank has an account switch feature, it’ll take seven days to move. Without it and by using normal moving procedures, it takes around 10 days.
If you can take advantage of any incentives the new bank is offering, or if you’re moving to a location your old bank doesn’t cover, then yes, you should. Otherwise, weigh the pros and cons of your current and prospective new bank and make a decision.