How To Switch Banks : A Step-by-Step Guide

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You’re switching banks because you got offered an exceptional new customer bonus, you’re finally getting paid interest, or you’re just tired of having to deal with terrible customer service? You’re excited to move forward but you’re also thinking about how to switch banks? I get it!

Following the seven steps below is the easiest way to switch banks!

Step 1: Choose Your New Bank.

The first step is to choose your new bank if you haven’t already. You’ll have dozens of options however some banks are better than others so don’t jump to any conclusions without carefully reviewing your options.

One bank may be better than another simply because it better suits your needs. For example, if you prefer to go to the bank in person, don’t open an account with an online bank that doesn’t have any physical locations.

Here are a few things to consider before choosing your new bank:

  • Ensure the bank is FDIC-insured.
  • If you’re opening a savings account, ensure you’re getting the highest APY (Annual Percentage Yield).
  • Zero monthly fees. You shouldn’t have to pay monthly fees, if you are, you’ve opened an account with the wrong bank.
  • Comply with minimum balance requirements. Many accounts have minimum balance requirements. If you don’t have the minimum balance in your account, you’ll get charged a monthly service fee. You can avoid the fee by simply meeting the minimum balance however if that’s not something you can commit to then it’s not the right bank for you.
  • Strong cyber security. Has the bank experienced a recent data breach?
  • Branch and ATM accessibility. If you prefer or have to visit the bank in person, are there branches and/or ATMs near you?
  • Mobile deposit. If you mobile deposit checks frequently, will you still have that option?

If you can’t decide between two banks, choose the one with the best reputation. It’s better to choose a bank with a long-standing history than a new bank that hasn’t been around as long.

Here’s a list of the 5 Best National Banks from NerdWallet.

If you are switching your checking and savings account, they don’t have to be opened at the same bank. It’s better to open a savings account at an online bank because they offer the highest interest rates however online banks don’t have physical locations.

If you like and need to visit a bank in person, open your checking account with a brick-and-mortar bank like Chase, Bank of America, Fifth Third Bank, etc.

If at this point you’re wondering about the right number of bank accounts, check out, How Many Bank Accounts Should I Have?

Step 2: List Your Automatic Payments and Direct Deposits.

The second step is to list every automatic payment and direct deposit. This will be the most time-consuming but important step when you switch banks.

Create a list for every account you’re switching including savings and checking accounts. You’ll notice that your savings account list will be significantly shorter than your checking account, however it’s still important to create a list so don’t skip it!

Here are a few examples of what might be on your list:

Direct Deposits:

  • Employer direct deposit
  • Dividend income
  • Consulting fees
  • Freelance income

Automatic Payments:

  • Mortgage/Rent
  • HOA fees
  • Utilities (Water, Gas, Garbage, etc.)
  • Cell phone
  • Car insurance
  • Health insurance
  • Credit card payments (persona, retail, etc.)
  • PayPal
  • Student Loans
  • Public Transportation
  • Retirement account contributions
  • Brokerage account contributions
  • Streaming subscriptions (Netflix, Hulu, Disney +, etc.)
  • Music services (Apple Music, Spotify, Pandora, etc.)
  • Gym membership
  • Magazine subscriptions

As you add an item to your list, add the day of the month it’s withdrawn from your account

.Also, don’t forget about your quarterly and annual payments if applicable. For example, do you have quarterly life or car insurance payments? To make things easier. I’ve created an automatic payments and direct deposits list PDF that you can download for FREE.

Step 3: Open Your New Bank Account.

The third step is to open your new bank account. The third step is the quickest and easiest. You’ll most likely have the option to open your new bank account online.

When you’re ready to open your new bank, have the following ready:

  • A government-issued ID like a driver’s license or passport.
  • Your social security number.
  • Address confirmation such as a recent utility bill.
  • Your current routing and account number to make a transfer if necessary.

After you have opened your new bank account, you’ll get your new routing and account number. If you open a new checking account, you will get your new debit card in the mail.

If your new bank account has a minimum balance requirement, make sure you transfer the required amount.

If you opened your account in person, make sure to create an online account.

Step 4: Update Your Automatic Payments and Direct Deposits.

The fourth step is to update the bank account information connected to your current automatic payments and deposits. If you opened a checking account, wait until you receive your debit card in the mail to continue with this step.

This step will most likely take you the longest so make sure to set aside at least an hour to update all your accounts at once. Grab your favorite snack, drink, play your favorite music and make yourself comfortable! It’s not the most exciting task but you have to do it! Make sure to grab the list you created in step two.

Your list will help speed things up and ensure you don’t forget to update any accounts. I recommend updating your direct deposit bank account information first. Next, before you update your automatic payment information, make sure you have, or will have, enough money in your new account.

A few other housekeeping tasks as your transition to your new account:

  • Outstanding Checks. If you issued checks that haven’t been deposited yet, ensure you have that amount in your old bank account.
  • Mobile Wallet. If you use a mobile wallet, make sure to add your new card(s).
  • Order Checks. If you use checks, make sure to order a few.

Lastly, before you begin updating your direct deposit and automatic payment bank account information, ask your new bank if they offer Switch Kit. Switch Kit makes switching banks easier. If that’s an option at your new bank, definitely take advantage of it.

Step 5: Transfer Money to Your New Account.

The fifth step is to transfer your money to your new bank account. However, don’t transfer it all at once. You’ll want to keep enough money in your old bank account to meet the minimum balance requirement and cover any automatic payments you may have forgotten to update.

I recommend waiting at least two months before withdrawing all your money and officially closing your old bank account.

Step 6: Close your Old Bank Account.

The sixth step is to close your old bank account.

After confirming your direct deposits and automatic payments have been updated successfully, it’s time to close your old bank account. You might think that closing a bank account means withdrawing all your money but it doesn’t.

To officially close a bank account, you have to let your bank know you want to close the account. How you close the account will depend on the bank. Some banks let you close your account online or over the phone. Other banks require that you visit a branch and close the account in person.

Regardless of how you closed your old bank account, you must request written confirmation stating your bank account was closed.

You want written confirmation the account was closed in case the bank accidentally lets a payment go through and you get stuck with fees.

Congratulations! You have officially closed your bank account once you have received written confirmation from the bank the account was closed.

A few other housekeeping tasks before you officially close your account:

  • Save your statements from the previous twelve months.
  • Ask the bank if you will still have online access.
  • Get rid of your old cards and checks.

On to the last step to switch banks successfully!

Step 7: Set Up Alerts On Your New Bank Account.

The seventh and final step is to set up alerts on your new bank account. If you didn’t set up alerts on your old bank account, this is the perfect opportunity to do so.

I recommend setting up alerts for a few reasons. The main one is to prevent becoming a victim of fraudulent activity. For example, I’ve chosen to receive a text alert whenever a transaction (online or in-person) is over $.25. Instead of reviewing my statements to ensure every payment is correct and valid, why not get a text and confirm right away? I recommend setting up the following alerts:

Savings Accounts Alerts:

  • Payment Alerts. Online and in-store.
  • Withdrawal alerts. Federal regulations limit savings account withdrawals to six per month. You can set up an alert when you’re close to the limit to avoid penalty fees.

Checking Accounts Alerts:

  • Payment Alerts. Online and in-store.
  • Wire Alerts. I’ve never processed a wire however I have an alert set up in case someone hacks my account and tries to do it on my behalf.
  • Disable overdraft protection. If you don’t have the money, your payment simply won’t go through which is good because you shouldn’t be buying in anyhow.

To set up alerts, log in to your account online and go to your settings. You should have the option to “choose alerts”. Here’s an example of what that screen looks like for my Chase account:

Now that you’ve reviewed the seven steps to switch banks successfully, you can feel confident about how to switch banks online!

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