Like karaoke night at your favorite bar, new banking fees have a way of making even longtime customers head for the exits.
But saying you’ll leave your bank over higher fees and actually doing it are two different things. Many bank customers take advantage of a number of services offered by banks these days, including direct deposit and automatic bill pay, which complicate the process of switching banks.
To combat this, many banks and credit unions offer “switch kits” to help speed the process along, but you’ll still have a fair amount of legwork to do before you can say goodbye to your old bank.
To simplify things, here’s a step-by-step guide to help you tie up all the loose ends that can come with taking your checking account business elsewhere.
4 steps for moving a bank account
- Find a new checking account provider
- Open a new account
- Switch over direct deposits and bill pay
- Close the old checking account
Find a new checking account provider
Carefully selecting a new financial institution is probably the most important part of the process because selecting a new bank that’s a bad fit could mean you have to start your search all over again in a few months.
That search should start with looking at what your priorities are for a checking account.
That’s important because it’s unlikely you’ll find an institution that offers everything on your wish list, says Ray Soifer, a banking analyst and consultant in Green Valley, Arizona. Lower fees may mean giving up some benefits your old bank offered, such as a nationwide network of branches.
“Most customers don’t do that much traveling or don’t do much in the way of international business, and they may very well get a better deal from a local institution that wants their business,” Soifer says.
Once you’ve narrowed your list of potential candidates, take some time to go over the fine print of the checking accounts they offer.
“See what the balance requirements are and what the fees are,” Soifer says. “Also, see if they have any special deals that may be of interest to you. For example, some banks offer better terms to seniors.”
Open a new account
Once you’ve chosen your new bank, the next step is opening a new checking account.
If you haven’t opened a new bank account in a while, you may be surprised at the information you’ll be required to provide, thanks to provisions of the Patriot Act.
Here’s a list of what you’ll need:
- Your name, address and date of birth.
- Official photo identification, such as a driver’s license, state ID or passport. If you can’t provide any of these, some banks will take two forms of official non-picture ID, such as a Social Security card or a birth certificate.
- Your Social Security number.
- An opening deposit in the form of cash, check or payment information, including account number and nine-digit routing number, for an existing bank account with a balance big enough to cover the amount.
That last part is key. The amount of money you’ll need to start a checking account can vary greatly. Bankrate’s 2017 Checking Account Survey found the average minimum deposit needed to open an interest-bearing checking account was around $583. The average minimum to open a non-interest-bearing checking account, $163, was much lower.
Switch over direct deposits and bill pay
Switching direct deposits and bill pay over to your new bank just takes a bit of paperwork and precise timing.
First, you’ll want to cancel any automatic bill payments scheduled at your old institution, to prevent those payments from overdrawing your old checking account.
Then, arrange to switch your direct deposit to the new account with your employer’s human resources department. You might need to bring in a canceled check from your new account, but your new account number and routing number may suffice.
After doing that, it’s time to start rescheduling automatic bill payments from your new account. Keep in mind that if you’ve authorized a particular vendor to automatically charge monthly payments to your debit card, you’ll need to give them your new debit information to prevent an overdraft or late payment.
These steps should be taken in a short time frame to prevent double payments.
Close the old checking account
Now it’s time to bid a fond (or not-so-fond) farewell to your old account. Do this in person, if possible. That way you’ll walk away with proof your account is closed and the bank won’t attempt to tack on charges later or report you to ChexSystems for unpaid items.
You’ll want to be sure all checks written from the account have cleared before taking out the last of your cash.
If your account is closed when those checks attempt to clear, they’ll bounce, potentially damaging your relationship with whomever the check was written for or incurring late-payment fees.
To find out whether your checks have cleared, you can compare your check register against your online statement. Alternatively, you can call the parties you wrote checks to in order to verify they’ve cashed them.
To put the finishing touches on your checking account transition, shred all the checks and debit cards that came with your old account to prevent them from being used by identity thieves.