If you have an existing bank account and you’re considering making a change, you might be wondering how to change banks without throwing your finances into a state of disarray.
We understand. Switching financial institutions is a hassle – and it can be extremely stressful, too. Fortunately, there are some things you can do to make the transition with minimal disruption.
With that in mind, here’s what you need to know to change banks and bank accounts with the least possible amount of stress and disruption.
The first step is to do some research about where to open your new account. If you haven’t already chosen a bank or credit union, it’s a good idea to shop around, ask questions and make sure you understand what you’re getting before you open a new account.
Make sure to ask about each financial institution’s requirements, fees and services. As much as possible, you want to understand what to expect.
The next step is to open your new account. You may be required to make an initial deposit. Completing the paperwork and getting your new account in working order is a must before you close your old account.
Ideally, you should wait until you have your debit card in hand, checks and your new financial institution’s mobile app before you take the next step. It often takes about two weeks to have everything in place.
Many of us set up automatic payments through our financial institutions. If you’ve been using automatic payments, you’ll need to update your payment information with each payee before you close your old account.
The best way to accomplish this task is to go through your last year of banking statements and identify recurring payments. Some recurring payments happen monthly, but you may have some that occur quarterly or annually. Make a list, so you can update your payment information.
Is your paycheck automatically deposited into a checking account by your employer? If it is, you’ll need to update your direct deposit with your new account information immediately.
Keep in mind that it can take several pay cycles before your direct deposit is sent to your new account. Big corporations may take their time making the switch. At most companies, you should go to the human resources department to ask about the procedure for changing your direct deposit to your new account. You’ll probably need a voided check from your new financial institution and account, as well.
The next step is to set up a link between your old and new accounts. It can take a while to get every payment updated. For example, if you have direct deposit through your employer, it may take a few pay cycles before your money is sent to the new account.
Many banks and financial institutions use Zelle, and if yours does, you can make instant transfers for free using your bank’s mobile app. You could also use PayPal or Venmo, but there’s an extra step required, and it might not be free. (PayPal has instant transfers, but they charge a 1% fee.)
It’s probable that there will be a few mistakes as you change payments to your new account. You may find, as we stated above, that your employer is slow to correct your direct deposit information. You may also find that you missed a recurring payment or forgot to update something along the way.
For that reason, it’s important to leave your old account open for a while and monitor it. If you didn’t have many automatic payments, it may be that monitoring it for a month or so will be enough. However, if you continue to see activity, you’ll need to update things as you go and leave it open until you’re sure you’ve addressed every issue.
The final step is to close your old account. Make sure to check with your old bank to see if there are any fees before withdrawing your remaining money. You’ll probably need to inform your old bank in writing that you’re closing the account. Check to see what their requirements are before taking this final step.
It’s worth noting that you likely will not be able to transfer your remaining balance electronically. You can either go to the bank and make a final withdrawal in cash or have your financial institution issue you a check. Either way, you can then turn around and deposit the money into your new account.
Switching banks can be a hassle, but the steps we’ve outlined here will ensure that you have a smooth transition to your new account.
To learn more about Addition Financial’s personal savings accounts, please click here now.