Has customer service at your bank gone downhill? Or maybe you're looking for lower fees, higher interest rates, and a better online banking experience?
Whatever your reasoning, we want to make sure you're making the best choices to help you successfully switch banks.
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Choosing Your New Account
If you want to switch banks, the first thing to do is — shocker! — open a new account with a new bank.
Here are a few things to consider when you're looking for that new bank account.
Products
Not all banks offer the same products. Some may offer the full suite of checking and savings accounts, loans, certificates of deposit, mortgages, and more. Others may offer only checking or savings accounts with no lending options.
Know what services you want, and then narrow down your choices. For example, if you want to maximize your savings, you may want to look at banks with high-yield savings accounts. If you're anticipating a lot of transactions, you'll want a checking account with low fees.
If you're a freelancer or entrepreneur, you'll want to make sure your new bank offers business checking accounts.
Typically, online-only financial institutions offer better interest rates on their savings accounts, while more traditional banks offer a bigger product range.
Account fees
Make note of things like ATM fees, monthly maintenance fees, overdraft fees, etc. It’s not unusual to have fees, but the fewer they have, the better for you. Don’t be afraid to shop around!
If the account has a monthly fee, find out if you can have it waived. Typically, this requires maintaining a minimum balance in the account or having a direct deposit.
RELATED: What Is Overdraft Protection?
Branch locations
Is it important for you to be able to visit the bank in person? If so, make sure the bank has convenient locations, such as near your home or work. Your choices will now shrink to brick-and-mortar banks.
If you feel you don’t need to visit the bank in person, then an online-only bank could suit you just fine.
RELATED: Credit Union or Bank: What’s the Difference?
Online banking features
Most banks these days have fully functional online banking features. But if you need specific services, ask customer service if those services are available.
Read reviews online to see what other people’s experiences have been.
ATM accessibility
If you need access to an ATM, you'll want to find out which ATM network the bank participates in. Common networks are Allpoint, MoneyPass, and Co-op.
If you travel and want to be able to use an ATM, make sure they have international ATMs as well.
Some banks will also reimburse ATM fees up to a small limit, like four or five per month.
RELATED: What Is Early Direct Deposit and Which Banks Offer It?
Customer service
Assess their customer service by calling and asking some questions about the account. This will give you first-hand experience, plus you can learn all the details before committing.
It's also a good idea to read online reviews to get a feel for the service that people have received in the past. Just keep in mind that people tend to review banks only when they've had a bad experience, so look for patterns instead of focusing on individual reviews.
Then, compare the overall reviews with competing banks. If the bank you are considering has 2 stars, but so do all the others, then it's likely to have average service rather than an actual 2-star experience!
Welcome offers
Sometimes banks have special welcome offers for new customers. This could equal a few hundred dollars just for going through the effort of switching to a new bank.
If the account has a welcome offer, make sure you fully understand all the hoops you have to jump through to earn it.
Typically, this is having your direct deposits hit within a certain amount of time after you open the account. It may also include a certain number of debit card transactions in a set period of time.
Make sure that you follow all the directions exactly, or you'll miss out on your bonus.
Opening Your New Account
Opening a new account is fairly straightforward, and you can probably even do it online.
You'll need to just complete the following steps:
- Give your basic information. They'll need your Social Security number and address, plus you may have to upload a picture of your government-issued ID.
- Make your initial deposit. Be prepared to deposit some money into the account. You'll need the information from your current bank account to make this transfer.
- Get your new routing number. Once you have the new account open, make a note of the routing number and account number, as well as when your debit cards will be arriving.
- Get the app. You'll probably also want to download the bank's mobile app and sign in.
Redirecting Your Automatic Transactions
Once you have your new checking account open, contact your work's HR department to move over your direct deposits. You'll need the routing number and account number of the new bank account.
Keep in mind that this rarely happens quickly, and depending on your employer, it might even take a few payment cycles.
Once you have your debit card, start moving over any automatic payments you have coming out of your old account. Go through your past bank statements and make a list of any payments you need to switch over, then contact each company individually to give them your new card info.
Keep Both Accounts for a While
Unfortunately, switching to a new financial institution isn't exactly a quick process. You'll probably need to keep both accounts open for a few weeks or a month to make sure that everything is moved over properly.
What you really want to avoid are transactions on the old account after you've closed it. This could cause fees from both the bank and the company. You'll want to ensure all checks have cleared (if you write checks) and that you've caught all the recurring payments.
Another thing: Don't forget about the IRS! If you're waiting for a tax refund (which can take weeks or months), leave the account open until you receive the money.
If you've gone 30 days or more without any transactions on the old bank account, and you can't think of anything that might be pending out there, then you are likely safe to withdraw the remaining funds and close your old account.
RELATED: How Many Bank Accounts Should I Have?
FAQs
Should I choose a bank or a credit union?
That depends on what you're looking for in a financial institution. Credit unions typically have lower fees and higher interest rates than banks. However, they may not have all the features and technology that a bank probably has.
Do I have to switch banks when I move?
Not necessarily. If your bank is local to your previous area, you may decide that it's more convenient to switch to a bank in your new region. However, if you continue to be happy with your old bank, there's no reason you have to switch.
How long does it take to switch banks?
Realistically, it's probably going to take between 30 and 60 days to fully make the switch to a new bank account. It also means you should have a little extra money on hand while you are in transition, since both accounts need funds while all the automatic bill payments and deposits are moved to your new account.
TL;DR: Switching Banks 101
Before you switch banks, do your homework on fees, products, ATM access, and customer service, so that you choose the right bank for you.
Then, once you open your new account, you'll need to update your direct deposit for your paycheck and any automatic payments.
Keep both accounts running for at least a month to catch anything you forget. Don't close your old account until you're 100% sure everything has moved over.
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