How to Switch Banks

Switching banks isn't complicated. But, there are several things you have to do first. Read to find out.

Does your current bank no longer spark joy?

Whether it's an unpleasant experience or a tempting offer from another bank, perhaps it's time for a change.

Learn the simple steps to switching banks and how to make sure you don't regret it.

Why People Decide to Switch Banks
Below is a table showing different reasons for switching banks.

How to Switch to a New Bank?

Switching banks can be a straightforward process if you plan it carefully and strategically. Below are 6 steps to take if you decide to move your deposit account to another bank.

Pick A New Bank

Look for a bank that offers services, fees, and features aligning with your financial needs and goals. You should also compare interest rates, account options, online banking capabilities, and branch locations (if planning to move to a brick-and-mortar bank).

List Recurring/Automatic Transactions

Identify recurring transactions linked to your account such as:

• Automatic bills payment
  
• Automatic direct deposits
  
• Recurring transfers and payments

You can check your statements in the last 12 months to ensure that you won't miss any during your transition to a new bank.

Additionally, if your current account has rewards, use them up so you don't forfeit them when you eventually close your account.

Open Your New Account

Most banks will allow you to open an account in person or online. To ensure a smooth process, come prepared with necessary requirements and information.

They usually ask for the following:

• Personal Information (e.g., name, date of birth)
  
• Contact Information (e.g., email, phone number, residential address)
  
• Social Security Number (SSN) or Employer Identification Number (EIN)
  
• Government ID (e.g., driver's license or state ID card)

You can also set up online and mobile banking right away. Do test transactions to see if everything works and activate alerts according to your preference.

Redirect Your Direct Deposits and Automatic Transactions

Inform your employer, billers, and payors to update your banking information with your new account details for future transactions.

Sort out any postdated checks you have issued as well by providing alternative payments to those involved. Doing these will help avoid penalties arising from delays in receiving or making payments.

Transfer Remaining Funds From Your Previous Account

You can empty out your old account by doing any of the following:

• Withdraw cash at a branch or ATM
  
• Transfer electronically to your new account
  
• Request a check from your bank

Just make sure to only transfer remaining funds after all automatic transactions have been switched to your new account which could take a few months.

Close Your Old Account

Make sure to close your account immediately after you've transferred all the remaining money in it. Otherwise, your bank might charge you a monthly fee if your balance falls below the minimum requirement.

If your old account does not have a minimum balance, keep it open until you are sure that your direct deposits and recurring transactions are no longer coming through.

Additionally, check with the bank for any closing or early account closure fees, and settle them accordingly. Safely dispose of your bank card and remaining paper checks to prevent fraudulent transactions.

When Should You Switch Banks?

Generally, you may move from one bank to another when your current bank is unable to meet your financial needs and goals.

Other reasons to switch banks include the following:

• Better Interest Rates
  If you are coming from a traditional bank, you might be tempted by the higher APYs of online banks. This may be worth considering if you tend to keep high balances that barely grow in your current bank.

• Less Fees
  Many banks have free checking options, which can be helpful if you want to save on fees. Others either waive incidental charges or have lower fees on excess withdrawals, overdrafts, out-of-network ATM use, etc.

• Attractive Perks
  Banks may offer sign-up bonuses from time to time, which can be anywhere from $100 to $500 for regular checking accounts. This extra cash may boost your funds, pay toward minor debts, or cover small expenses.

• Relocation
  If your account is with a regional bank, it may not be available in your new location. Thus, you'll have to find a new bank with a nearby branch.

• Unsatisfactory Service
  Frequent runaround treatment, like poor online banking service or security issues, can be a dealbreaker, pushing account holders to seek better options.

Although your current bank may have fallen short of your expectations, don't be too rash in your decision without reading the next section.

Tips To Land the Right Bank

Here are some things to consider when searching for another bank:

1. Consider a better account option first.
   Check if your current bank has other account options first. For example, if you are annoyed by fees, they might have a free checking option that could save you $10 to $20 each month.

   Discuss your options with your bank's relationship manager before considering a switch.

2. Do your research.
   Bank reviews and input from family or friends who use the bank you're considering are valuable. If many customers share a concerning issue, continue searching for other banks.

3. Look at other bank types.
   If you're unsatisfied with major banks, consider smaller banks, online banks, or credit unions. These types of financial institutions may offer more personalized services, avoiding another big bank switch.

4. Call your potential bank.
   Banks may make an extra effort to impress potential clients. Test their customer support by assessing response time, efficiency, and available options. Visit their physical branch, if available, for a more in-depth experience.

5. Make sure it's covered by insurance.
   Although most financial institutions are insured either by the FDIC or NCUA, always check if the bank you're moving to is. Note, however, that these insurance agencies only cover up to $250,000 of your deposit balance if the bank were to go under.^[3][4]

FAQs

Can you switch banks without closing an account?
If you don't plan to use the old account anymore, you must close it since the bank may not automatically do so. They may even continue to charge monthly fees. However, you can keep your old and new accounts as long as you can manage having both.

Which banks give you money for switching?
Several banks, like Bank of America and Chase, entice you to switch to them by offering attractive sign-up bonuses. However, their promotions are often limited-time offers. So if you see one, you better grab it before it's gone.

Do you get all your money when you close a bank account?
You can withdraw all your remaining funds before you close your account.

But even if you have closed it, the bank is legally required to return any money left in your account after deducting any applicable fees. They usually send it back by mailing a check.

Bottom Line

Switching banks is a big financial move that can help you improve how you manage your finances. It can even bring you better banking opportunities in the long run.

But, remember to think this through before making the move. Look at the benefits of your potential bank, such as lower fees, better customer support, or higher interest, so it becomes a good decision.

May this endeavor take you to greater financial success and peace of mind!

References