How to Switch Banks

A Step-by-Step Guide for Switching Banks

Bank customers wait in line to see a representative
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Sometimes the only thing that keeps someone 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 your move to a new bank 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, whether it's a checking, savings, or money market account. Then, carefully review the bank features and fee schedule along with online customer reviews of the banks. You'll choose between institutions like:

  • 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 they are nonprofits, and customers may benefit from that through perks like more lenient fee schedules and better interest rates.
  • Online banks: These banks don't typically have an in-person branch you can visit. They make up for a lack of physical presence with lower fees and higher interest rates.

Consider what is the most important aspect of banking to you, then look for a bank that specializes in those offerings. Are you looking for a high-interest savings account? Do you want access to a wide range of products like auto loans, mortgages, and credit cards? Do you want a convenient app? Whatever you're looking for, there's probably a banking institution that offers it.

Open Your New Bank Account

The sooner you get your new account up and running, 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. Use these account opening tips 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. You’ll want to have your debit card in hand and all your online accounts set up (including any apps) before you switch to using your new account exclusively.

Supply Any Requested Forms

Some banks may require you to sign and return forms by mail to activate wire transfers or other features of your new account. Promptly returning these forms will allow 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. 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 offer account switching services that take the burden of account switching off of your plate. For example, the bank might handle the transfer of your automatic payments and direct deposits, and it may 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. This information packet will have all the key information you need to complete the switch, such as your new account and routing number for direct deposit forms.

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 automatically. 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.

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, and three months should be considered the 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 the bill payments 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

Use your new bank's app or website to link your new checking or savings account with all your other active accounts. 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 emergency fund.

Plan a Day to Make the Switch

There are a lot of moving pieces with switching bank accounts, so you should carefully plan the day you want to switch over your money, direct deposits, and bill payments. If you aren't careful, you might not leave enough money in the old bank account for an automatic bill payment you overlooked, and that could result in an overdraft fee.

Keep a small amount in your old account to minimize potential damage. If you have to keep your old account open a month longer than you planned, so be it. It’s better to pay from the old account, rather than miss a payment or pay late. Late payments on loans, in particular, can force you to pay penalty fees, and it may even affect your credit scores.

Many mistakes are due to poor timing of switching bank accounts. Plan your day for finalizing the switch around important planned transactions. 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) have time to update your account information before the next payment is due.

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 few extra months.

Before you close your old account, balance your checkbook one last time to be sure there are no outstanding checks or overlooked electronic payments in your old account.

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 yours doesn't, then 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.