A hassle-free guide to switching banks

April 8, 2023

Whether you’re tired of getting hit with fees or looking for a better return on your savings, you may be thinking about breaking up with your current bank and opening a new account somewhere else. Is it a hassle?Not necessarily. However, there are certain steps you’ll need to take — and in a certain order — to make switching banks go as smoothly and seamlessly as possible. Here’s what you need to know.

Choosing the Bank Which Best Suits Your Needs

From traditional brick-and-mortar banks to all the new online banks, there are lots of banking options to choose from these days.

As a result, it can definitely be worth your while to shop around. As you weigh your options, here are some factors you may want to consider:

Initial minimum deposit
Welcome bonus
Minimum daily balance requirements
Fees (like monthly service fees, transfer fees, and ATM fees)
Branch and ATM locations
How much interest you’ll earn
Mobile app features
If the account is FDIC– or NCUA-insured

Also keep in mind that you don’t have to have all your money in the same bank. For example, it’s fine to have a checking account (or both a checking and a savings account) at one bank and a high-yield savings account at an online bank, perhaps earmarked for your vacation or emergency savings. However, you’ll want to keep the number of accounts you have manageable so you can keep track of balances.

Making a List of All Your Auto Transactions From Your Current Bank

After narrowing your choices to one preferred bank, the next step is to create a list of existing direct deposits and automatic transfers going to and from your current bank account. This is key for making a smooth transition. You don’t want your paychecks going to your old account or any automatic bill payments processed for a closed account. To come with your list, scan the past year of bank statements and note all subscriptions, automatic payments, and direct deposits happening in your current account. Jot down the sender’s or recipient’s name, amount, and approximate date the transactions on your list occur.

Opening Your New Bank Account

Many banks allow you to open a new bank account either online or in person. To complete an application form, you typically need to supply basic personal information and documents, such as your name, address, email, government-issued photo ID, and Social Security number. Keep in mind that if the bank you choose requires a minimum deposit to open the account, you’ll need to be ready to deposit or transfer those funds into the account immediately upon opening it. If you’re opening the account in person, you can use cash or a check. If you’re opening the account online, you’ll need to provide the routing number and account number of your current bank in order to transfer funds into the new account.

Signing Up for Online and Mobile Banking

Online and mobile banking make it easy to manage your account from your computer or mobile device. You may be able to enroll in online banking right away or you may have to wait until you get an email with your account information in a day or two. Once you’re ready to access your account online, you’ll need to go to the bank’s website and set up a username and password. Depending on the bank, you may be required to set up multi-factor authentication or verify your account via email or text to get started using online or mobile banking features. After you set up your online account, you can download the bank’s app to your mobile device and log in there as well.

Once you have online banking, you may want to personalize your account alerts, such as alerts when a deposit hits the account or when your account balance goes below a certain threshold. You can typically choose whether you want to be alerted by text, email, or app notification.

Also consider whether you’d like to opt for paperless statements. Some accounts may require that you opt into e-statements or charge a monthly fee if you request paper statements.

Updating Your Automatic Payments and Transferring Your Money

Once you have your new account set up, it’s time to make the transition from your old account to your new one. Using the list of transactions you made from your old account, you’ll need to:

Change all direct deposits. This involves updating your banking information with any payer (such as your employer) that directly deposits checks into your account.
Reschedule automatic payments. You’ll need to update account information with any service providers (such as your credit card, cell phone, and utilities) so that automated payments will come from your new account rather than your old account. Just be sure there is enough money in your new account to cover these transactions.
Set up recurring transfers. If you have any recurring transfers, such as a transfer of a certain amount of money from your checking account to your savings account, you’ll need to set those up to occur between your new accounts.
Update your mobile wallet. If you have payment details in a mobile wallet or any payment apps, you’ll want to update them using your new account.

You may also want to transfer most of your money from your old account to your new account. It’s a good idea to keep some money in your old account for a full billing cycle, however, to ensure you didn’t miss any transactions.

Closing Your Old Bank Account

Once you’ve confirmed that all direct deposits and automatic payments have been successfully rerouted to the new account, you can transfer any remaining funds in your old account to your new one and officially close your old account.

The exact process for closing a bank account will depend on your bank. Some banks allow you to close your account online, while others require you to call customer service or go into a local branch. In some cases, you’ll need to submit a written cancellation request or fill out an account closure request form. You can typically find instructions for closing an account on your bank’s website.

The Takeaway

With all the banking choices available these days, you may be able to find an account that costs less and/or pays more than your current bank. For example, some high-yield savings accounts offered by online banks pay 25 times the average savings account interest rate. Plus, these accounts often come with low, or no, fees.

If you find a better deal and want to make a move, switching banks generally only requires a few steps. They include finding and opening your new account, updating any direct deposit or recurring payments with your new account information, then closing your old account.

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This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.

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