Changing banks can be a real hassle. But we these simple steps, you can switch banks effortlessly, without missing a direct deposit or automated payment.
Switching banks may seem as daunting as buying a new computer or doing your own taxes — or both, put together. You’d love better service, but dread the tedium of the transfer, set-up, and orientation process. There have been times when I’ve wanted to change banks, but the thought of going through all the hassle just didn’t seem worth it.
While it does take some effort, moving your accounts from one bank to another is really not that difficult. There are a few traps to watch out for (see below), but the process is not as painful as we sometimes make it out to be. I’m in the process of changing my business bank accounts from Capital One to Citibank and thought it would be a good time to cover the steps you should take if you ever want to switch banks.
Step 1: Choose Your New Bank
You may already have a new bank in mind, but if not, it’s time to do a little bit of homework. To find a new bank, you might start by asking friends and family members if they are happy with their bank. Current customers have the low-down on what a bank is really like. How long are the lines at lunchtime? How user-friendly is the online banking? How accessible are the ATMs? These are questions that only a current customer can answer. Call it a shortcut, but they’ve already done the legwork you’re setting out to do.
You should also consider local banks and credit unions. Often these smaller financial institutions offer great service and competitive rates. And finally, it’s worth consider some of the best online banks. Because they don’t have the expense of maintaining branches, online banks typically offer the highest interest rates on savings accounts, high yield CDs, and even free checking accounts.
Step 2: Open the New Bank Account
The next critical step is to open your new bank account before closing your old one. It may seem like an obvious step, but sometimes in frustration with their current bank, people close an existing account out of anger. Resist this temptation. No matter how anxious you are to switch banks, open your new account first. This includes not only applying for the new account, but getting your debit card and checks. You want to have the new account fully in place and ready to go.
Step 3: Set Up Direct Deposit
If you use direct deposit for your paycheck or government benefits check, set up direct deposit to your new bank account. Setting up direct deposit is extremely easy, and your new bank can walk you through the steps. All you will need is the bank’s routing number and your account number, both of which will appear on your new checks.
Step 4: Switch Automatic Payments
You may pay a number of bills automatically from your old bank account. For example, we have our mortgage, home equity line of credit payment, and several utility bills paid automatically from our checking account. You may also have automatic transfers from your checking account to some form of savings or brokerage account. If you use these automated features, you’ll need to change them over to your new bank account. This is a critical step that can trip up folks. If you close your old account before making these changes, you may miss important payments. It’s also critical to remember to keep enough money in your old account to cover these payments until you’ve made the switch.
Step 5: Close Your Old Account
Now to the last step. Wait until all checks and other withdrawals have cleared your old bank. Then confirm that all automatic payments are withdrawn from your new bank. Then you can close your old bank account.
With this step, it’s critical to make sure all payments have cleared your old account, otherwise you could end up bouncing a check.
Some banks offer a brochure to help walk you through the bank switch process (download the pdf here).
At the end of the day, it can really pay to switch banks. In fact, as the banking industry gets back on its feet, you might find the incentives to do so downright irresistible.Topics: Banking