How to switch banks in 6 simple steps

5 min read

Like karaoke night at your favorite bar, banking fees have a way of making even longtime customers head for the exits.

But there’s a difference between saying you’ll leave your bank and actually doing it. Many consumers take advantage of services like direct deposit and automatic bill pay, which can complicate the process of switching banks.

Many banks and credit unions offer “switch kits” to help speed the process along. But there’s still a fair amount of legwork involved in breaking up with a bank.

Not sure where to start? Here’s a rundown of what you’ll need to do when you’re ready to say goodbye to your old savings and checking accounts.

1. Decide whether you need to switch

Frustration with your bank may be a good reason to move on. But switching banks is a process you shouldn’t go through without fully thinking things through.

In some cases, the issue could be the account you’ve opened, not the bank itself. Another account offered by your existing bank could be a better fit for you. Or perhaps you could keep your current account open and simply open an account at a different bank. A savings account paying a low yield, for example, could be kept open and used to store tax dollars, especially if you run your own business or have a side hustle.

If you’re truly dissatisfied with your experience and want to see what other banks have to offer, decide what you’re looking for and begin the process of finding a new bank.

[COMPARE: Best online savings accounts]

2. Find a new bank or credit union

No one wants to switch banks only to discover that they’ve made a mistake. It’s important to list your expectations for the new bank you’re choosing and do plenty of research.

Decide what matters most to you. Are you looking for an online bank or would you rather stick with a traditional financial institution with thousands of branches? Are you hoping to replace all of your accounts or are you primarily looking for a new checking account? Would a credit union be a better fit for you or do you prefer sticking with a bank?

Something else to consider is cost.

“Determine how much in fees the new bank or credit union will cost you a month. Hint, it should be zero,” says Michael Foguth, founder of Foguth Financial Group in Brighton, Michigan. “Make sure the services you’re looking to obtain from the new bank or credit union come at no extra cost.”

Consider these other factors before choosing a new bank:

  • Minimum balance requirements
  • Overdraft fee policies
  • Monthly service fees
  • ATM fees and refunds
  • ATM access
  • Yields for savers
  • Interest rates for borrowers
  • Digital offerings
  • Budgeting tools
  • Banking apps
  • Early direct deposit
  • Customer service
  • Bank reputation

Bank reviews make it easier to compare banks. See how the products and services of different institutions match up side-by-side.

3. Understand the new bank’s requirements

Once you’ve narrowed down your list of potential candidates and you’re ready to choose a bank, take some time to review the fine print in the disclosures posted on the website. Ensure that there aren’t any hidden fees or terms and conditions that could be problematic. If you can’t find the bank’s disclosures, reach out to a representative for additional details.

Don’t be afraid to ask questions if something doesn’t make sense. Get clarification on everything from fees to ATM refunds (if they’re offered and there’s a way to track your use of this benefit).

If you’re trying to qualify for a bank account bonus — which some banks offer when you open a new checking or savings account — make sure you know what’s required in order to qualify for the bonus, like having a direct deposit of a certain amount by a deadline or maintaining a particular balance.

4. Identify linked accounts and automatic charges

You won’t be ready to switch banks until you’ve taken inventory of every account connected to your checking and savings accounts.

Get organized and make a list of all linked accounts and automated charges, like credit card and student loan payments. This may take a while depending on how much you rely on services like online bill pay. But in the end, it’ll be worth it since you’ll have to open new accounts and set up automatic payments.

Once you’ve taken account of all of the bills paid with money coming straight out of your account, cancel any existing scheduled payments to prevent them from overdrawing your old checking account. Make sure to speak with someone from human resources at your job so you’re prepared to switch your direct deposit to the new account.

5. Fill out your new account applications

The next step is opening a checking, savings or money market account at your new bank or credit union.

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.

Here’s a list of what you’ll generally need:

  • Your name, address and date of birth.
  • Official photo identification, such as a driver’s license, state ID or passport.
  • Your Social Security number.
  • An opening deposit in the form of a check or electronic payment. You may also be able to wire funds into the account, depending on the bank. If you’re depositing money into your account by transferring it from another account, make sure to gather the other bank account number and nine-digit routing number.

That last part is key. The amount of money you’ll need to open a new account can vary. Bankrate’s 2019 Checking Account and ATM Fee Survey found that the average minimum deposit needed to open an interest-bearing checking account is around $575. The average minimum needed to open a non-interest-bearing checking account, $163, is much lower.

After opening your new accounts, it’s time to start setting up direct deposit and rescheduling automatic bill payments. 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.

6. Close your old bank accounts

Now it’s time to bid a fond (or not-so-fond) farewell to your old accounts. Do this in person, if possible. That way, you’ll walk away with proof that 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 whoever 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.

Before closing your old bank account, you’ll also want to figure out if there is a fee to close it, Foguth says.

To put the finishing touches on your transition, shred all the checks and debit cards that came with your old account to prevent them from being used by identity thieves.

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