Switching banks may have many reasons behind it including the want of a higher interest rate, better customer service, or simply needing more branches of a bank in your location. It is a simple process if you are aware of all the steps involved. Here is a succinct list of what you have to do to complete this process hassle-free.
Find your ideal deal
Here are the steps you need to go through to decide which bank or credit union will fit your needs.
- Know the features that you desire: Maybe you just want to have more access to ATMs or you have been aiming to get better services. Maybe you want to shift to an online bank with better rates than a brick-and-mortar bank. You need to do a thorough scanning of your needs before you select the new bank. In that, high interest and low fees are a must.
- Diversify your choices- It is not mandatory to open all your accounts at one bank. Diversifying your account helps to optimize finances and gain more benefits than usual. You can maximize your annual percentage yield by opening a savings account in an online bank and opening a checking account at an offline bank where you will get impeccable in-person assistance.
Open the account
After you have found your ideal bank, now it’s time to open the account by adhering to all the formalities. You will be needed to submit applications and documents to verify and open an account. These include a passport, driving license, social security number, etc. You might also need to transfer the funds to the new account either through a check or electronic transfer.
- Credit score- While verifying potential applicants, a credit score is not checked often. This screening is done through Chexsystem, where it will show if you have had conflicts with the previous bank or overdrawn your account at a frequent pace. Soft or hard credit pull is also done where the hard pull results may give a reduction in your credit score. A credit score might be considered if you decide to apply for a line of credit or overdraft protection program in a bank.
- Deposit the minimum amount- While most of the banks only demand 0-$100 as a minimum deposit, some exceptions require thousands of dollars, so you should be prepared according to that.
Prepare checklist of services from old bank
To ensure that you are making a complete transition when switching banks, this checklist will help you in a seamless switch.
Firstly make a list of the following.
- Linked accounts
- Direct deposits
- Recurring transfers
- Monthly or annual automatic bill payments
The list of services you should include.
- Paper checks
- Safe-deposit box
- Mobile app
- Banking alerts
Step 4: Transfer your cash
Opening a new account when you’re switching banks needs you to transfer the funds, too. Here are the stages that you need to follow.
- Sustain some money in your old account- This is to keep provisions for minimum balance fees or uncleared checks.
- Direct deposits- Update every place with the new bank details so salary or other deposits come directly into your new account.
- Automatic payments- Make sure future automatic payments come from your new account.
- Check the list- Remember the list that you made in the previous step? Check it and see if anything is left and do the needful. This includes transferring your safe deposit box, downloading the application, updating the cell company, cable, etc.
Step 5: Closing the old account
Now that all the formalities are over for the new account, you need to close the old one. The Consumer Financial Protection Bureau suggests getting a written testament that confirms the closure of the account.
You can either close the account over the call or get a written note. The latter is the way to go. Remember, you have to take your stand as the bank might try to convince you not to leave.
You should close your bank account only after finishing all the pending payments and deposits. It is so because sometimes the bank may reactivate a dormant account to fill pending payments.
Step 6: Cross-check everything and you are good to go
After all these steps, your money’s new abode is ready. Ensure all auto payments are clear so no blunders arise in the future.