When dissatisfied with your current bank, you might (or must) start considering the possibility to switch banks. Reasons because of which you would switch banks are numerous, but the aim of this post is to briefly describe some basic steps in the process of how to switch banks. When you are ready to change bank you have a couple of alternatives (bank wise): large bank, local bank or online bank. You could also consider switching to a credit union. Coming back to the banks as an alternative, the decision about the type of bank you want to switch to is entirely up to you. As far as the process for switching banks, there are a couple of basic steps that you should consider.
How to switch banks – basic steps involved
There are some basic activities that you should perform before switching banks. These activities should help you to painlessly switch banks, and limit your additional charges and/or fees that might appear.
- Decide on your new bank – your primary step should be to decide which bank will be your new bank. Although, you might read a recommendation that this should be a second or third step, this should be your primary action. This is so because, you should start the bank switching process before you close down your account with the old bank. In addition, knowing beforehand which bank you are going to, will help you speed up the process of switching banks. Moreover, having decided on your new bank, will prove beneficial for reducing the hassle that could be involved during the process of switching banks.
- Prepare your documents – in order for you to open an account with another bank you should fulfill a couple of requirements. For the purpose of assuring smooth opening of your new account, make sure that you have gathered all the necessary documents. This way you could save redundant trips to your bank, and open the account faster. Thus, before opening your new account, remember that you need to make sure to know what do you need to open a bank account.
- Don’t use your existing bank to make any payments or transactions – Plan ahead and withdraw enough cash to last during the entire process of changing banks. When withdrawing cash, aside of the cash you need for your everyday purchases, you should also consider the amount you will need to open a new account. Do not use checks, or debit cards issued from your old bank anymore. Before closing existing accounts, make sure that you have decided on your new bank. Never make any anger driven decision about your current bank. Meaning that you should not close your existing account immediately after someone in your old bank has pissed you off. Prior to changing banks, you should consider the whether you really need to change your bank. You can get additional information by read the post about – Switching banks – is it worth?
- Set up your automatic transactions – after opening your new account, and stopped using your old account, you should consider your automatic transactions. Meaning that, now is the time you should switch your direct deposits (redirect your income) and bill pay. Stated differently, when opening new account with different bank, do not forget that you should also make switch to the following: direct deposits from paychecks, unemployment benefits, different bill payments, linked accounts, smart phone apps, pension and/or annuity income, income from investments, etc. Basically, you should consider switching to your new bank (thus, canceling with your old bank) all the activities you have. To make sure you have set up all of your transaction with your new bank, make a check list. Meaning that, you should make a list of all of your transactions and apps linked to your old bank.
- Transfer the majority of your money to your new account – do not transfer all of your money into the new account. Make sure that you have a certain balance left on your old account before closing it. This is especially important if you do not have the habit to keep a clear record of your transactions and checks or purchases. Although you may see a recommendation to transfer all your money to the new account, a wise thing would be something else. Namely, to protect yourself against some additional charges that may come from your old bank. You should maintain some minimum balance on your account in case you have forgotten checks or some forgotten transaction. Keep both accounts active for about three months (maybe more if you are not sure about the number of forgotten checks or transactions). In addition, pay attention to the minimum balance required on your account with your old bank, so as to avoid minimum balance fees. If you transfer all of your money to the new bank, some checks might bounce. This could result in you paying a late-payment fees on your old account. Make sure you have enough balance on your old account to clear any forgotten checks and transactions and avoid paying minimum balance fees or late-payment fees.
In order to make the switching banks process easier for clients, banks are offering so-called “Switch kit”. This switch kit should guide you step by step through the process of switching banks. The switch kit could ease your process of switching banks. You could ask your new bank whether they offer a switch kit when opening new account for the purpose of changing banks.
Switching banks is an important decision that should be made carefully. You should never decide to switch banks in a moment of anger. If you have decided to switch banks, the next thing is to gather information regarding the question – How to switch banks? More or less the process of switching banks in USA is same between banks. But the steps performed on your behalf could be different from person to person. Some want to close down the old bank account before opening new account, others would maintain both account simultaneously. Generally speaking, there is no right or wrong thinking. But, as an informational guide, when asking yourself how to switch banks, you should: select your new bank, open an account, stop using your old account, have enough money to go through the transfer period, automate your transactions with your new account, and don’t close the old account for couple of months.