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With online banking becoming the norm, switching banks is now easier than ever. Today, switching banks can be completed almost exclusively online.
Here’s how to switch banks in 8 easy steps:
- Select a new banking institution.
- Make a list of account transactions.
- Open and fund the new account.
- Update direct deposits to your new account.
- Update automatic draft payments to your new account.
- Link your savings account to your checking account.
- Temporarily keep the old and new accounts open.
- Close the old account.
You may want to switch banks for different reasons. Perhaps you’ve outgrown the account, and it no longer meets your needs or you’re being charged fees that you now want to avoid.
Whatever the reason, this article will walk you through all the necessary steps.
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1. Select a New Banking Institution
There are many banks to choose from, ranging from small local banks to those with locations scattered across the country. Some banks are regional while others are international.
Member-owned credit unions also fulfill a banking role for those who are eligible. There are also a growing number of online banks, including well-established major financial institutions such as Discover, Goldman Sachs, and Ally Finance.
Make sure your new bank (or credit union) meets your needs and goals. Research banks thoroughly. Here are some helpful tips to use when selecting a new bank:
- Find a bank that charges low or no fees.
- Consider accessibility. Convenient ATM location is a key factor for many people. Online only banks usually have a larger ATM network than banks with physical locations.
- Make sure your bank fits your lifestyle. Keep in mind your spending habits.
- Consider digital features. If it’s important to you, you should examine the bank’s digital features to ensure they fulfill your needs.
- Carefully read the terms and conditions. You want to understand the terms and conditions thoroughly. Read all the fine print.
- Read reviews. Sometimes, the best perspective is from that of customers (and members in the case of credit unions).
2. Make a List of Account Transactions
It’s easy to forget or overlook any automated payments you may have into or out of your accounts. Before you move forward with actually opening up the next account, make a note of your account transactions.
This step will save you hassle and trouble in the long run.
If possible, monitor your transactions for a few months. Some bills may occur quarterly, annually, or semi-annually, and it’s easy to forget about these infrequent charges.
An extended review period to monitor account transactions will help.
3. Open and Fund the New Account
There are a few common accounts available, these are:
Opening a new account is a straightforward process. You can go to a bank branch if you select a physical bank. Otherwise, you can simply go to the bank’s website, select the account type you want, enter your information, and agree to the terms.
Next, you’ll likely need to fund your accounts. Some banks allow you to open for $0, but eventually, you’ll need to fund the account. Most banks offer a few different ways to fund, but transferring from the account you’ll close is a common choice.
If you open up a checking account, it can take up to 10 business days to receive your debit card via mail. To make money more accessible to their customers, some banks issue debit cards for savings and money market accounts, too.
It can take about the same amount of time to receive checks in the mail if you order them. If you open your account in a bank branch, you may get a few counter checks to use in the interim.
4. Update Direct Deposits to Your New Account
If your paycheck is automatically deposited, you’ll need to update it to the new account. It can take a pay period (or two) to switch, so it’s best to do this as soon as possible.
You’ll need to fill out a form from your employer to get this process started.
5. Update Automatic Draft Payments to Your New Account
Taking the list that you created in step two, you can begin to redirect automatic payments to the new account. Once you get the automated drafts set up, it’s a good idea to monitor those bills for the first month or two.
6. Link Your Savings Account to Your Checking Account
Saving is important. Linking your savings account to your checking accounts makes saving much easier. Once they’re linked, you can set up automatic transfers to continue growing your savings account.
Some banks allow you to use your savings account as overdraft protection for your checking account.
7. Temporarily Keep the Old and New Accounts Open
There may be some hiccups along the way as bills and paychecks make their way to the new account. It’s best that both accounts remain open for a short period, at least two months.
This way, you can monitor both accounts and make sure that all of your direct deposit and automatic drafts are functioning in the new account.
8. Close the Old Account
Closing the account varies widely and depends on the bank. There’s a strong possibility that the bank will try to retain you as a customer, so be prepared. Some banks require proof of identification before account closure.
If available, heading into a bank branch may be an easier choice. Contact your bank to find out the exact steps required to close your account.
After your account is closed, it’s a good idea to get written proof and keep it for your records. Finally, destroy any debit cards and all checks associated with your old bank account.
Should You Switch Banks?
Switching banks isn’t a complicated process. It does require some time, however, so it’s best to plan ahead and research banks and accounts first.
Make sure to find a bank that fits your needs and goals, staying away from the factors that made you close your previous bank account.
With these simple steps, you can switch banks hassle-free.
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