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If you have been with your bank for a long time, you may have wondered what other banks or credit unions offer and if you are getting the best rates and service.
The thought of changing banks may seem like a daunting task, but it is pretty easy to do and takes no more than 15 minutes.
Is Switching Banks Easy?
Yes, switching banks is easy. The hardest part is narrowing down which bank you want to open an account with. Fortunately, most of the time, you can open a new bank account online.
Is it Bad to Switch Banks?
No, there is nothing wrong with switching banks when it comes to credit scores or credit history. You will want to make sure that if you have any automatic payments (bill pay) set up, you transfer them to your new bank before closing your old bank account.
How to Switch to a New Bank or Credit Union
Step #1: Figure Out What Financial Products You Need
As mentioned above, the hardest part about switching banks is finding a new place to open an account with.
When doing this, you will want to make sure the bank you choose offers all the financial products and services you need.
Step #2: Research Where to Open Your Next Account
When you know what financial products you want, it is time to look for your next bank. If you have been with your current bank for a while, you may be surprised by all the different options there are.
Regardless of the type of bank you go with, confirm it offers you the products you are interested in and prepare to open a new account.
Step #3: Open Your New Account
Once you have a bank picked out, it is now time to open an account. Most banks allow you to open an account online, and it only takes about 15 minutes.
If you are going into a bank to open an account, check to see if you can schedule an appointment. This will save you time at your local bank. Regardless of where you open your bank account, you will need to provide the same information:
- Legal Name
- Date of birth
- Social Security Number
- Current Mailing address
- Phone number
- Email address
- Government Identification
Step#4: Make a List of Direct Deposits & Automatic Transactions
You will want to make a list of any direct deposits and automatic transactions, such as Bill Pay, so you can set them up with your new bank account.
Some banks offer a service that helps you transfer all automatic transactions, so it is worth talking to both your old bank and your new bank about this.
Step #5: Set-Up New Direct Deposits & Transactions
If neither your old bank nor your new bank offers any service to help you transfer automatic transactions, you will want to do this manually before you close your old bank account.
If you get paid via a direct deposit, you will also want to let your employer(s) know so they can update your banking information.
Step #6: Close Your Old Account
It is a good idea to keep your old account open, with some funds, for a month or two. This is to ensure you did not forget about any outstanding check or automatic credit/debit transaction.
The last thing you would want is to have a debit transaction come in after you close your account or do not have enough in your old account, and you are then charged an overdraft fee.
After a couple of months of no transactions to your old account, you can close it. Contact your old bank to have this done, and make sure you receive some form of written communication that your bank account has officially been closed.
Step #7: Verify Old Account is Closed
Once you receive written confirmation that your account has been closed, discard any debit cards and checks tied to the old bank account. For your safety, you will want to shred these.
Step #8: Enjoy Your New Bank or Credit Union Account
Congratulations on your new bank account! Hopefully, you are enjoying lower fees, earning higher interest rates, and a better mobile experience.
You will want to make sure you understand any account fees and take advantage of any new member bonuses.
Some banks provide a welcome bonus when you do things such as setting up a direct deposit or using your debit card a certain amount during the first 60 or 90 days.
It doesn’t hurt to read the fine print or contact your new bank and ask a representative.
>> Next Steps: How to Open a Bank Account Online
How to Switch Banks FAQs
Why Do People Switch Banks?
People switch banks for many reasons, such as lower fees, higher interest rates, and a better mobile experience.
With some banks, you can receive direct deposits up to two days earlier and earn rewards for using your debit card.
Does It Cost Money to Switch Banks?
Although it does not cost money to switch bank accounts, depending on the new bank you are moving to, there may be a minimum deposit requirement to open your account.
Do I Need to Tell My Employer If I Switch Banks?
If you are paid via direct deposit, you will want to tell your employer(s) about your new bank and supply them with your new routing number.
Does Switching Banks Hurt Your Credit?
No, switching bank accounts does not hurt your credit. You will want to make sure you leave your old bank account open for a couple of months, with some cash in it, just in case any debts hit your account that you forgot to transfer over.
Having a declined payment due to your account being closed could hurt your credit.
Bottom Line: How to Switch to a New Bank or Credit Union
With so many great banking options, you have no excuse to not switch to a new bank or credit union that offers you lower fees, earns higher interest rates, and provides a better overall experience.
Opening an account takes less than 15 minutes. All you need to do is supply your personal information and verify your identity.
Most of the time, there is no hard inquiry on your credit report for opening a new account, nor is there any negative impact for closing an old bank account.
Make sure your new bank offers all the products you are interested in and enjoy your new banking experience.