Switching banks might sound like a hassle — new accounts, new logins, and the fear of something going wrong with your paycheck or bills. But in reality, changing banks can be one of the easiest ways to save money, earn more interest, and get better customer service.
Whether you’re fed up with monthly fees, frustrated by low interest rates, or simply want a bank that fits your lifestyle better, making the switch may be easier than you think.
The process of switching banks isn’t difficult if you follow the right steps. Here’s how to make the switch.
If you’re thinking about switching banks, you have a variety of financial institutions to choose from, including national banks, community banks, credit unions, and online banks.
Not sure where to start? First, you should clearly understand why you plan to switch. Are you changing banks due to higher interest rates, lower fees, or better security? This will help guide your research so you can target banks with the right features.
For example, if you’re interested in a bank with a large branch and ATM network and a full suite of banking and investing services, a national bank might be the right choice. However, if you’re more concerned about earning the best interest rate on your savings and avoiding fees, an online bank may be a better fit.
Read more: Guide to choosing a bank for the average consumer
Once you are ready to open your new account, gather the required documentation to apply. This likely includes your driver’s license or passport for identity verification, proof of address, and Social Security number.
Based on your needs, decide which type of account you will open, such as a checking or savings account. Most banks and credit unions let you apply online, but you might also decide to open an account in person.
Fill out the form with all necessary information and submit it. Barring any issues, your new account will be open right away.
Step 3: Transition automatic payments and deposits
One important step people often overlook is moving their automatic payments and deposits to the new account. If any of these transactions fail during the switch, you could accidentally miss a payment or trigger an overdraft.
Start by making a list of all recurring transactions tied to your old account. This may include rent or mortgage payments, utilities, streaming services, and direct deposits from your employer. Be sure to account for less frequent charges as well, such as quarterly insurance premiums or annual membership dues.
Next, update each payment by logging into the provider’s website or app and entering your new bank account information. Keep in mind that some changes can take one or two billing cycles to fully process, so it’s a good idea to monitor both accounts during the transition.
Next, transfer your money from the old bank account to the new one. You might consider keeping a small buffer of money in the old account for a time. This can help ensure any lingering transactions go through successfully while you transition to the new account.
You can initiate the transfer once you decide how much money to move. Most banks let you do this online, but may also let you move money via check or wire transfer. Some banks have services to help with this process.
Read more: 5 ways to transfer money from one bank to another
Keeping your old account open for a month or two is often a good idea. This helps ensure all pending transactions clear successfully. If you have left some money in your account, keeping it open will allow any lingering automatic payments to be processed.
Once enough time has passed, or you are certain all transactions have been processed, you are ready to close your old account.
Once you’ve double-checked that all automatic payments and direct deposits have been moved to your new account, you are ready to close the account.
Similar to other steps in this process, you can often close your old account online. However, you can also call the bank. Some may even require you to visit in person or send a letter. The exact process can vary, so follow your old bank’s closure instructions to ensure everything goes smoothly.
Once you have completed all the necessary steps, ask the bank for written confirmation that the account has been closed. This could be an email or a paper letter you receive in the mail.
Read more: Does closing a bank account hurt your credit score?
Finally, you are ready to start setting up your new account. Create a username and password for your bank’s online banking portal. If you use mobile banking, download your new bank’s mobile app. Most modern banks have both Android and iPhone apps.
As an optional step, you can set up bank alerts for transactions, low-balance alerts, or other transactions you may want to keep tabs on. This helps ensure you are aware of anything with your new account that may need your attention.
Switching to a new bank account can seem like a big task, and you may put it off. However, all the steps mentioned in this guide can be completed in 30 minutes or less if you do everything online. Of course, they will take longer if you visit your old and new banks in person.
Still, the process is relatively quick in most cases. And if you take the proper steps to avoid any hiccups with automatic transactions, the process should be relatively painless, too. Instead of putting it off, start the switch today so you can take advantage of better banking features.
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