Is it time for you to switch banks? There are lots of reasons you might move your money to a new financial institution, like avoiding fees or getting a higher interest rate. Whatever your reason for making a change, going through the process can be a hassle.
But there’s good news: If you know how to switch banks the right way, you can move money to a new bank with minimal problems. Just follow these six steps to get your cash moved over, your new account set up, and your old account closed:
- Open an account at your new bank.
- Fund your new account.
- Order checks for your new account.
- Change direct deposits to your new bank.
- Switch payment information to your new account.
- Close your old account.
Let’s take a look at each step in detail so you know how to switch banks easily:
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1. Open an account at your new bank
Find a new financial institution that you want to use. You might choose one that
- provides excellent customer service,
- has a great mobile app,
- offers a good interest rate on deposits and savings,
- includes other perks like free checks, or
- doesn’t charge account fees.
The best bank accounts will have several of these features.
Some internet banks and a few local banks offer truly free checking. Many others require you to maintain a certain balance or make direct deposits to avoid fees. If your bank has requirements to avoid fees, make sure you can meet them.
Once you’ve found the right bank, submit the required forms to open an account. Most banks allow you to complete the entire process online. You’ll need to provide identifying information, including your Social Security number, and may need to answer some questions to confirm your identity.
2. Fund your new account
When you switch banks and open your new account, you need to put money into it. Most banks provide a few different ways to do this.
You could transfer the money automatically from your old bank account, send in a check, or make a deposit at a local branch or ATM. If you move money via automatic transfer, make sure you aren’t charged fees by your new bank or your old one.
3. Order checks for your new account
Some banks provide free checks, while others require you to pay for them. If your bank charges for checks, shop around to find the best deal on a book of checks. You can order your checks from anywhere when you switch banks. You just need to input your routing and account number.
While you may not use checks much, it’s still a good idea to have at least one checkbook. You never know when you’ll need a check to pay service providers that don’t accept electronic payments. And checks don’t expire, so you can keep them in your house forever — just in case.
4. Change direct deposits to your new bank
If you’re getting direct deposits, you need to change where this money goes when you get paid. Provide your new bank information to the human resources or payroll department at your organization. Usually, this involves filling out a form and providing your new bank account and routing number.
Depending on your company’s policies, it can take a few pay periods for your money to go into your new account. Request a change ASAP and make sure you keep your old account open until you confirm that your change has been processed.
5. Switch payment information to your new account
If you have autopay set up for any of your bills or investment accounts, change these payments or transfers to your new bank account. Remember to change both payments that you make through your bank’s website as well as any transfers made through your creditors or investment firm. This should be a simple matter of changing your account number and routing info.
To make sure you don’t miss any automated payments, look back through several months of bank statements and see what’s been debited from your account. Consider irregular expenses that are charged once a year, too, like annual memberships.
You don’t want any companies to try and fail to charge your account. You could get hit with late or insufficient funds fees if you don’t have the money in your old bank account.
6. Close your old account
Once you’re sure that direct deposits are going to your new account and you’ve switched over your bill payments, it’s time to close your old account.
Make sure the account is closed so you don’t get inactivity fees. Open accounts that you don’t use could be vulnerable to fraud, too.
In many cases, you can close your account online, but some banks will require you to come into the local branch. If you have any funds remaining in your old account, you may be able to receive the money as a check. You can also transfer the cash to your new account electronically.
You may have pending interest payments that you’ll receive several weeks after closing your account, so make sure you specify how you should receive those funds too.
Switch banks one step at a time
There’s a lot to do when you’re switching banks, but the process is simple if you take it step by step. The most important thing is to make sure you don’t drain your old accounts of funds until you’ve changed your automated payments and transfers. Wait to close your old account to avoid bounced direct deposits and overdrafts.
Figuring out how to switch banks might seem complicated. But if you’ve found a bank that’s a better fit, the effort will be worth it.
View more information: https://www.fool.com/the-ascent/credit-cards/articles/step-by-step-guide-switching-banks/