How to Switch Banks

A Step-by-Step Guide for Switching Bank Accounts

Illustration of dollar sign with suitcase - time to move.
Moving your money is easy: get everything ready and make the switch. Lewis Mulatero / Getty Images

Time to move your bank account? Sometimes the only thing that keeps us from moving 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 make a smooth move to your new bank.

1. Open your New Bank Account

Get it 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 test it out.

Get a head start: open your account at least a week or two before you plan on making the final switch so that you can use the account. You’ll want to have your debit card in-hand (which may come by mail) as well as online access and a password for 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.

2. Identify Monthly Expenses

Make a list – take note of bills that are automatically paid from your bank account by ACH. 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.

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

Either way, the idea is to start using your new account. 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: don’t just look through one month’s worth of transactions. Review the entire year (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 for payments to go to the new account. Of course you need to time this change with any expenses that will come out of your old account – you may need to transfer money between your old and new accounts (possibly by writing a check or making an electronic transfer) a few times before you’re done.

You can also try to time everything perfectly and make a full and complete change on a certain date.

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.

Slow changes: 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 probably can’t wait 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 what is required to shut down the account for good. In many cases, you can simply send a letter (here's a sample letter to close accounts if you need it). 

Take the money: withdraw any remaining money in cash (if it’s a small amount) or cashier’s check. Writing yourself a personal check won’t work unless you can process the check before your account is closed. When you close the account, make it official – give the bank formal instructions so they stop paying interest, producing statements, and charging fees.