Switching Banks: Checklist and Tips
A Step-by-Step Guide for Switching Banks
Sometimes the only thing that keeps us from switching bank accounts is not knowing how to make the leap. Fortunately, it’s easy to move banks when you break down the process into small, simple tasks.
Use the checklist below to make sure you've covered everything, and that your move to a new bank is as quick and painless as possible.
Choose a Bank
If you haven't decided where you want to bank, hone in on institutions that offer the type of bank account you want, be it a checking, savings, or money market account. Then, carefully review the bank features and fee schedule along with online customer reviews of the banks. Choose from the following types of banks:
- Traditional banks: These are brick-and-mortar institutions including big banks and community banks. They often, but not always, impose higher fees than credit unions and online banks.
- Credit unions: These are customer-owned entities that operate much like banks but may have more lenient fee schedules.
- Online banks: These banks typically don't have an in-person branch you can visit. But they often make up for a lack of presence with lower fees and higher interest rates.
Open Your New Bank Account
If you're switching banks, get your new account up and running—the sooner, the better. You can’t switch banks until you’ve got somewhere to go.
Opening an account is a small step you can usually complete online in 10 minutes or less. Make an opening deposit into your new account (some banks require a certain minimum opening deposit), wait for the funds to clear, and then check to make sure that they arrive in the new account. Enlist the account opening tips below to make switching bank accounts easier.
- Get a head start: Open your account at least a week or two before you plan on making the final switch. This is because it can take up to 10 business days to receive your new debit card by mail. During this time, you can also set up your online account, and create login credentials for online access to the bank. When you start to use your new account exclusively, you’ll want to have your debit card along with online access, a working password, and your bank’s mobile app.
- Supply any requested forms: Some banks may require you to sign and return forms by mail for wire transfers or other features of your new account to be activated. Promptly returning these forms allows you to start using all the features of your new account right away.
- Link to the old account: Set up an electronic link between the new account and the one you intend to close. This is the easiest and cheapest way to move money, as you may need to shift funds around once or twice until everything is set. If both the new and old banks use a person-to-person mobile payments platform such as Zelle, you’re in luck—that’s often the fastest way to move money for free.
Ask About the Bank's Account Switching Resources
Some banks today offer account switch services whereby the staff will do the heavy lifting of the switch for you. For example, they might transfer your automatic payments and direct deposits and even notify your old bank to close the account. It's worth inquiring with your bank about their account switch services to make the switch as easy as possible.
Even if your bank doesn't offer this service, they may still offer a switch kit. A switch kit is an information packet containing a list of essential tasks needed to switch to the bank and forms you can fill out (containing spaces for account numbers and direct deposit forms, for example) to make it easier for you to update these accounts during the switch.
Identify Monthly Expenses
Take inventory of all bills that you automatically pay from your bank account before switching banks. You shouldn't close (or empty) your old bank account until you have canceled these payments and set them up to be paid from your new account.
You may want to switch to old-fashioned paper bills for a while so nothing gets lost in the shuffle. You can still use the old account to pay bills using online bill pay, but be sure to “push” the money from the account while it's still there instead of having your service providers “pull” payments when you might not expect it. Use these tips below to help avoid lapsed payments during the transition.
- Start using your new account: If you’re going to write checks or use online bill pay, start writing checks from the new account so that you get into the habit of using it. Fund those payments by transferring money from your old account.
- Use parallel accounts: If your old bank account doesn't incur maintenance fees, or you can afford the fees, fund both accounts with enough to cover outstanding bills. Switch the bill payments to the new account as each bill comes due.
- Identify payments in past statements: Review the entire year of transactions in your old account to ensure that you account for any upcoming payments that are typically billed on a less frequent basis. 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.
Redirect Your Income
If you have direct deposit going into your old account, ask your employer to update payments to the new 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 switching banks.
It may take several pay periods or billing cycles to switch payments 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
Link the New Account With Other Active Accounts
Through the online interface of the new bank, link your new account and another checking or savings account at the same bank or a different bank. This step allows you to make one-time or recurring transfers from one account to another so you can more easily meet your financial goals.
For example, linking accounts enables you to schedule automatic transfers from a checking account to a retirement account or a savings account you're using as an emergency fund or a fund for a down payment.
There’s a decent chance that somebody—possibly you—will make a mistake when switching bank accounts. For example, you might not leave enough money in the old bank and get charged an overdraft fee on a payment you overlooked.
That's why it's important to keep a small amount in your old account to minimize potential damage. If it takes an extra month for your electronic bill to move over, so be it. It’s better to pay from the old account than to miss a payment or pay late. Late payments on loans, in particular, can lead to penalty fees (from your bank and your service providers) and even affect your credit scores.
Many mistakes are due to poor timing of switching bank accounts. There are two approaches you can take when timing the switch to a new bank:
- Set a date for switching banks all at once. You can try to time incoming and outgoing funds perfectly and make a full and complete change on a certain date. But it’s easy to forget about an upcoming payment or an outstanding electronic check and throw a wrench in the whole plan.
- Wait for important transactions to complete. 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 that your service providers (like your electric company, mortgage, and insurance) and your employer have time to update your account information.
Don’t close your old account too quickly. It may take longer than you expect to update direct deposit and automatic billing instructions.
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.
Empty and Close the Old Account
When all expected debits and credits have cleared in the old account, 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.
The final step of switching banks is to close the account. Some banks provide the option to close accounts online. If not, contact the bank and ask how to shut down the account for good. In many cases, you can request account closure over the phone or send in a letter, but joint accounts may have additional requirements. Once the bank has confirmed that your account is closed, you have successfully switched banks.
Consumer.gov. "Opening a Bank Account," Accessed Nov. 18, 2019.
Alliant Credit Union. "How Long Does It Take to Get a Debit Card or a Credit Card?" Accessed Nov. 18, 2019.
Discover. "Checking Account FAQ: When Will I Receive My Debit Card and Checks?" Accessed Nov. 18, 2019.
Starling Bank. "Switch Your Current Account to Starling," Accessed Nov. 18, 2019.
Northwest Bank. "Switch Kit," Accessed Nov. 18, 2019.
Consumer Financial Protection Bureau. "What Is the Best Way to Move My Checking Account to Another Bank or Credit Union?" Accessed Nov. 18, 2019.
First Alliance Credit Union. "Your Guide to Switching Bank Accounts," Accessed Nov. 18, 2019.
New York State Department of Financial Services. "Understanding your Credit Report and your Credit Score," Accessed Nov. 18, 2019.