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How to Switch Banks: Checklist and Tips

A Step-by-Step Guide for Moving Bank Accounts

Time to move your bank account? Sometimes the only thing that keeps us from taking action is knowing how to make the change. Fortunately, it’s easy to switch banks when you break the process into small, simple tasks.

Follow the checklist below to make the move to your new bank as quick and painless as possible.

1. Open your New Bank Account

Get your new account up and running—the sooner, the better. You can’t switch banks unless you’ve got somewhere to go.

Opening an account is a small step you can complete online in 10 minutes or less. Make a deposit into your new account, wait for it the funds to clear, and check to make sure that everything looks good.

Get a head start: Open your account at least a week or two before you plan on making the final switch. This allows you to use the account when you need to. You’ll want to have your debit card in-hand (which may come by mail) as well as online access, a working password, and your bank’s mobile app.

Link accounts: Set up an electronic link between your old and new accounts. This is the easiest and cheapest way to move money, and you may need to shift funds around once or twice until everything is dialed in. See how to link your bank accounts. If both of your banks use Zelle, you’re in luck—that’s often the fastest way to move money for free.

2. Identify Monthly Expenses

Make a list: Take note of all bills that you automatically pay from your bank account. You can’t close (or empty) your old bank account until you set up an alternative way to pay those bills.

You may want to switch to old-fashioned bill payments for a while so nothing gets lost in the shuffle. You can still pay bills using online bill pay, but you’ll “push” the money out instead of having your service providers “pull” payments when you might not expect it.

Parallel accounts? If you can afford it, fund both accounts with enough to cover the bills, and switch the bill payments to the new account as each bill comes due.

Ideally, you’ll rely on your new account as much as possible. If you’re going to write checks or use online bill pay, start writing checks from the new account, and fund those payments by transferring money from your old account.

Full view: Review the entire year of transactions in your old account. Last month’s statement is not enough—three months is a bare minimum. You may only make certain payments annually or quarterly, and those tend to be important payments (life insurance premiums, for example). Other payments may be rare, such as PayPal drafts out of your checking account for infrequent eBay purchases.

Make a list of all your expenses, and check them off one-by-one as you make arrangements to switch them to your new bank account.

3. Redirect your Income

If you have direct deposit going into your old account, ask your employer to switch payments to the new account. Of course, you need to time this change with any expenses that will come out of your old account. Again, be prepared to transfer money between your old and new accounts (possibly by writing a check or making an electronic transfer) several times before you’re done.

All at once? You can also try to time everything perfectly and make a full and complete change on a certain date. But it’s easy to forget things, and glitches can throw a wrench in even the best-organized plans.

When to switch: Look back through your transaction history and find a date that will give you plenty of lead time. For example, if you don’t have any automatic transactions between the 2nd and the 12th of each month, change everything on the 2nd so your service providers (electric company, mortgage, insurance, etc.) and your employer have time to update your account information.

Delays: It may take several pay periods or billing cycles to have payments switched to a new bank account. Ask your employer how long the process takes, and schedule things accordingly.

Be sure to consider all of your income sources, including:

Social Security benefits
Pension and annuity income
Investment earnings and systematic payments

4. Expect Mistakes

There’s a decent chance that somebody—possibly you—will make a mistake as you switch banks.

Keep a few bucks in your old account to minimize the damage. If it takes an extra month for your electronic bill to move over, it’s better to pay from the old account than to miss a payment or pay late. Late payments on loans can lead to penalty fees (from your bank and your service providers) and even affect your credit scores.

5. Keep your Old Account Open (For a While)

Don’t close your old account too quickly. It may take longer than you expect to update direct deposit and automatic billing instructions. Wait at least a month or two to be sure that everybody is using your new account information. If you’re switching banks due to fees, you’re probably eager to close your account. However, if you’re changing for other reasons (a geographic move, for example), it’s safest to leave your old account open for a while.

Balance your checkbook one last time to be sure there are no outstanding checks or overlooked electronic payments in your old account.

6. Finally, Close the Old Account!

Close your account once you’re sure you don’t need it. Contact the bank and ask how to shut down the account for good. In many cases, you can just send a letter (here’s a sample letter to close accounts if you need it), but joint accounts may have additional requirements.

Take the money: Withdraw any remaining money. You can do this in cash (if it’s a small amount) or by requesting a cashier’s check. Writing yourself a personal check is not as safe because you might not be able to process the check before your bank closes the account. Either way, make it official. Give the bank formal instructions so they stop paying interest, producing statements, and charging fees, and tell them where to send any remaining money.

Source: How to Switch Banks: Checklist and Tips

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