Loathe It? Leave It. 5 Simple Steps for Switching Banks
By Maryalene LaPonsie
Are rude tellers and outrageous fees among your bank's claims to fame? Enough already! Plenty of other banks want your business. Why waste your time and money on an institution you hate? You may think switching banks is a royal pain, but it's really not. Here are five steps to make the process as painless as possible.
1. Review Your Options
This step is likely the one you'll spend the most time on, but don't rush the process. You don't want to trade one bad bank for another. In fact, after your research, you may find you don't want a new bank at all. You may discover a credit union is your best bet for financial bliss. Everyone's priorities are different, but here's what you may want to consider when looking for the best financial institution for your money:
- Monthly cost of a checking account -- and how you can avoid paying it.
- Overdraft fees and overdraft protection options, as well as their cost.
- ATM availability and fees for using out-of-network machines.
- Online features, such as bill payment services and mobile account access.
- Branch locations and hours -- if you still like the personal touch.
- Perks such as credit or debit card rewards.
- Ability to bundle all banking needs (i.e. checking, savings, loans and investments) at one institution.
- Promotions for new customers.
2. Ask for a Switch Kit
Once you've settled on a new bank or credit union, ask for a switch kit. Some institutions offer a packet of forms and information to help guide you through the process of switching banks. Contents may include direct deposit forms, worksheets and checklists.
As part of a switch kit, you may also get a form to mail to your old bank asking them to close your account. That can be handy, but hold onto the form. You don't want to use it just yet.
3. Open a New Account
Now it's time to actually open the account. Depending on the institution, you may need to make an appointment to do so, or you may be able to walk in any time during business hours. Typically, you'll be required to provide:
- Government-issued identification such a driver's license.
- Social Security number.
- Cash for the initial deposit.
4. Update Billing Information
You have your new account open, but don't close the old one just yet. First, you need to make sure all your billing information is updated. If you use an online bill pay service, print out your list of payees and enter that information into the bill pay service for your new account. Checking each account off as you enter it is a good way to ensure you don't skip any.
Next, check in with your insurance companies or any other company you may have authorized to take payments automatically on a periodic basis. If you have a PayPal, Serve or prepaid card attached to your checking account, update those as well.
Finally, leave a balance in your old account to cover any outstanding checks or recurring charges you may have forgotten about. Since most checking accounts have a monthly fee attached to them, it could get expensive to leave your old account open indefinitely. However, you'll want to wait at least a month or two to make sure you've caught any straggling bills.
5. Close the Old Account
After a few weeks with no activity on your old account, it's probably safe to close it. At this point, you can send in the form your bank provided with the switch kit, or you can have the satisfaction of walking into a branch and telling them face-to-face that you two are through.
Have you ever switched banks? Leave a comment below or head to our Facebook page to tell us what finally pushed you to kiss your bank good-bye. Like this article? Sign up for our newsletter and we'll send you a regular digest of our newest stories, full of money saving tips and advice, free! We'll also email you a PDF of Stacy Johnson's "205 Ways to Save Money" as soon as you've subscribed. It's full of great tips that'll help you save a ton of extra cash.