How To Switch Banks: 4 Easy Steps To Change Banks
The relationship you have with your bank is more than a fling, it should be like a long-term relationship that you introduce to your family and friends.
You will want to make sure you’ve found “the one.” But what if the one from the past isn’t the one now? Maybe you’ve drifted apart, and you simply no longer get your needs met. It might be time to move on.
According to the ABA Banking Journal, nearly half of customers under the age of 55 are most likely to switch banks, typically for better digital features.
The real question is:
Is your traditional bank still the best banking option available to you?
Some banks are not keeping up with the times and still lead with face-to-face visits, offer limited ATM options, and impose high account-associated fees.
It may be time for you to break up with your old bank and switch to a banking relationship that meets your needs now.
Why Switch Banks?
People switch banks for many reasons, but some of the main ones are inconsistent or have difficult-to-use systems and poor customer service, high fees, and a lack of automated options.
With so many good banking options available, so there is no reason to stay with your bank out of loyalty. This is especially true if it’s inconvenient and fees are taking your hard-earned money.
How To Choose a New Bank
It takes a bit of research. You need to find the right options for the types of accounts and services that will work for you.
Many banks are becoming more automated and are offering more mobile-accessible functions and services.
Here is a list of service features to consider when trying to choose a new bank:
Zero transaction fees
Online and mobile banking
Mobile check deposit
Online bill pay
Free budgeting services
Peer to peer transfers
Email and text alerts
Bank Service Features
When switching banks, it’s important to know what services are key to managing your finances efficiently. The fastest and easiest way to bank shop is to go online and look at what each bank in your area offers. Depending on your situation you may choose a bank that doesn’t even have physical branch locations.
Key Bank Features To Compare
If you have personal loans through your current bank, you may want to reassess the loan terms. The online lending industry now offers very competitive lending rates.
You may find a consolidation loan that reduces your fees and increases your principal payments.
Consider looking at other non-traditional banking options, such as credit unions, online banks, and community banks. These types of financial institutions may offer lower fees.
However, they may provide a more limited range of services than traditional banks provide. This is why it is important to compare banks based on the services that are important to you.
>> Related: Best places to get a personal loan
How To Change Banks
Switching banks is easy once you have found “the one.” This step is so important because separating takes time and effort and can be an emotional rollercoaster.
Spend time researching what you truly want out of a bank relationship before changing over everything.
Sometimes discussing options with your current bank might entice them to make some changes, like lowering fees to keep you in the relationship.
However, if they still don’t meet your needs, pack your bags, and move on.
Now that you have found “the one,” follow the four steps below:
1. Open A New Bank Account
You may need to do this in person, but some banks now allow you to open a new account online. It’s a pretty simple process these days.
All banks will ask for your basic identification documentation, such as:
Social Security Number
Proof of Address
Personal Documentation Required
The bank will also likely require a minimum deposit amount when opening a new account. But don’t move all your money just yet!
You will want to use both your new and old accounts for a couple of months to ensure that you have not missed any outgoing payments.
Financer.com recommends making sure you know your minimum balance requirements on your old and new accounts during the transition period. This will save you from paying any associated fees.
2. List All Outgoing Payments
Before you cancel your old bank account, make a list of all your outgoing automatic payments.
The easiest way to do this is to print out statements for the last year. It may seem like a lot of work, but it will make sure you don’t miss any monthly, quarterly, or annual subscriptions.
Switching banks is the perfect time to go through your bill payments and subscriptions to see if you are paying for anything you no longer use. This may include a gym membership or magazine or app subscription, or anything else you forgot about over time.
It’s not the best way to spend your time, but it may save you a lot of money.
>> Related: How to cancel automatic payments.
3. Update Your Automatic Payment Information
Contact your employer and give them your new updated account information. After that, go through your list of all payments and begin changing the payment methods.
Your automatic payments should be easy to change online. Most websites or apps offer a “change payment” tab.
For some payments, you may have to call and speak to a customer service representative. If that happens, be sure to ask for a confirmation email that verifies the services were changed and keep it on file.
4. Close Your Previous Bank Accounts
Now that your income and automatic payments are updated, and you have gotten comfortable managing the new online banking platforms, you can finally say goodbye to your old bank.
Closing an account will be different for every institution. Some banks may require you to go in and close the account, while others will have an online option.
Once you have closed the account, it is important to request a letter that states that your accounts have been officially closed. That way, if the bank accidentally reinstates your account, you have proof of closure.
Banks sometimes reopen accounts if a check comes through. They could then charge you late fees or other account maintenance fees that you would be unaware of until you get a call or letter.
You want to cover your butt to avoid any chances of damaging your credit score.
Financer.com always encourages you to get written confirmation from banks and payment companies when opening and closing accounts and services.
Leaving a bank to find a new one can be time-consuming, but it can take less time than you think if done efficiently.
How do I switch to another bank?
In short, moving banks involve opening a new account at your new bank, moving all deposits and withdrawals, and then finally closing your account at your existing bank. Switching may save you money and get you a better interest rate on overdraft charges or account fees or get you a better interest rate on existing loans.
Does switching banks hurt your credit?
No. Switching banks should not have any effect on your credit score as long as you don’t apply for a new loan or credit card at the same time you’re opening a new account.
Is it wasy to change to another bank?
Switching banks is easy to do, but there are a few steps to take, and involves coordinating your old and new accounts with payments and deposits. You want to make sure you do this properly to avoid any missed transactions or overdrawn amounts.
If you have recently changed banks, let us know about the process. Was it difficult or easy? Were there any other steps you found particularly challenging? Tell us about your experiences by making a comment below:
- Bankrateaccessed on September 9, 2022
- ABA Banking Journalaccessed on September 9, 2022