What You Need to Know before Switching Banks

What You Need to Know before Switching Banks
 
 
 
 

The average American sticks with their checking account for 16 years according to statistics gathered by Bankrate.com. Those same statistics showed that 26 percent of us keep the same account for 20 years or more so changing bank accounts is a big deal. But it really shouldn't be. Today, banks operate in a very competitive marketplace so changing banks is inevitable when there's a better deal with a new bank. You can change your bank whenever you like but there are a few pitfalls to avoid. Let's help guide you through the process.

banks2
Image: Shutterstock

Better Rates

Are you considering a switch because of better advertised rates from a new bank? If so, run the numbers through a compound interest calculator to work out how much you'll really be earning if you switch. If this is the reason you're considering a switch, why not open a second bank account and save some money in the new account? Online-only banks often give a better interest rate so check those out first.

Changing Banks

If you decide to make the switch, there are a few things to do beforehand. You will lose access to all your current and archived banking information. For that reason, download statements of account so you can prove you've paid for something or you can research how much money you've spent on a given item over the years. You should also grab images of any important checks that have recently cleared into your bank and sync everything with a personal finance package.

banks3
Image: Shutterstock

Managing Change

You need to be heavily involved when you change bank accounts. Don't expect everything to run smoothly. It will most of the time but it'll run a lot smoother with your involvement. Devote time to the process. Open the new account two weeks before the old one shuts down. It can take that long for new debit cards to come through the mail. Use the time to set up an online profile for the new bank and download the mobile app. You might need to sign and return forms. These two weeks is the ideal time to do that.

Electronic Link

The easiest and cheapest way of moving money across from the old to the new account is through an electronic link. If both the old and new accounts use person to person platforms like Zelle, you'll be able to transfer quickly and easily. You'll need to know the bank names and locations and the ABA routing number, which is on the corner of your checks. Log into your existing bank and search for the "Transfer" function. It might also be referred to as "external accounts". Use that function to transfer the money. Before you do, your old bank will normally send trial payments to the new account to make sure it's set up properly. You'll be asked to check the deposit amounts, which are normally less than one dollar, and give that information to the old bank before the new account is verified.

banks4
Image: Shutterstock

Setting Payments

Setting up regular payments from the new account is a similar process. Again, you'll need your account details and routing number. Make sure you get everything right before pressing "submit" as you'll be dealing with your wages and all your major bills at this point. Getting anything wrong here could lead to late payment fines.

To Consider Before Your Purchase

You can also link your old and new accounts by writing a check or by completing a form in the bank.

Our Notes

  • Changing accounts within the same bank or credit union is the quickest and easiest way of changing bank accounts.
  • Consider keeping your old bank and the new account. There’s no issue having two banks.

What Do They Say on Other Sites

“If Customer A doesn't use ATM's or online banking, how could Capital One 360's checking account be labeled the most affordable for them? They would never sign up for that account based on their profile.” (John Stalboerger on Wallethub)

“If you were using online-only statements, be sure to print out 2-3 years of statements before closing the account." (Mike Castellano on Wallethub)

Any thoughts? Let us know your comments!

The site isn't responsible for the opinions expressed by third parties, delegating any legal responsibility to them.

 
 

Comments