Ever find yourself standing in line at the teller wondering how to switch bank accounts? Your bank might want you to keep wondering so that you don’t switch, but how difficult is it? Let’s have a look at how to switch checking accounts between banks.
Walk the Talk: How to Switch Checking Accounts
Why did the bank customer cross the street? To get higher interest, lower fees, and better service—of course! Except most customers don’t do it because switching your checking account to a new institution takes some work and needs to be done carefully to avoid missed payments and bounced checks. Here’s how to switch checking accounts between banks safely.
Step 1: Do Your Homework
Whether it’s a lack of ATMs or just one surcharge too many, assess why you want to quit your old bank and make sure that your new one is better. Look for:
Decent interest on your savings account
Low or no fees on checking accounts and transfers
A low-fee debit card
Online and mobile service with good security
Automatic bill pay features
Personalized service from a human you can see and talk to if needed
Step 2: List Your Automatic Bill Payments and Direct Deposits
The last thing you want is to miss a bill or even a mortgage payment because you were “between banks.” Use your budgeting tool or go through your statements. Look for:
Mortgage and auto loan payments
Credit card payments
Monthly recurring bills
Monthly memberships and subscriptions
Bear in mind that some scheduled expenses, such as insurance or utility payments, are deducted only quarterly or even annually. To be safe you should go through the statements for the past 12 months.
Finally, go through your checkbook and make a list of outstanding checks.
Step 3: Open Your New Bank Account
Now, do the walk—or a virtual click—over to your new bank or credit union and open your checking account. You’ll need to provide:
Proof of identity (usually a driver’s license)
Proof of your mailing and physical address (utility bills)
Your social security number
Your employer’s name and contact details
You’ll also probably need to deposit some money into your new checking account to cover the minimum balance without paying extra fees. To be completely safe, try to deposit enough to cover your mortgage or rent plus bills for a month—while still having funds to cover any costs in your old banking account.
Step 4: Direct Automatic Payments and Deposits to Your New Bank Account
Now, go through the list of automatic bill payments you created in Step 2 and make sure these are all redirected to your new checking account.
Pay particular attention to payments to lenders, including your mortgage and auto loans. Contact your mortgage company directly to make sure you don’t miss a payment or end up paying twice.
This should be pretty straightforward if you were using your old bank’s automatic bill pay feature. If not, you’ll need to visit each vendor’s website. In each case, decide if you want to set up future payments through the vendor’s portal or your new bank’s automatic bill pay.
Step 5: Direct Deposits to Your New Banking account
Next, make sure your incoming money arrives in the right account. You’ll likely need to fill out a form with your employers. Be aware that direct deposit instructions can take a month or two to process. Make sure your clients and renters have your new payment details.
Step 6: Link Your Savings and Checking Accounts
Consider opening a savings account when you open a new checking account. Linking your checking and savings accounts allows you to set up automatic transfers between the two. The money you don’t need for your day-to-day expenses can be diverted to:
Bolster an emergency fund
Save for a vacation or dream wedding
Cover unexpected overdrafts in your checking account
Step 7: Keep Both Accounts Open
Keep both accounts open for at least two months to make sure all your expenses clear and all of your deposits are received. Keep an eye on the list of outstanding checks you made to make sure they clear. You want to print or save off statements from the account that will be closing. After closing, these statements won't be accessible without a fee.
Step 8: Close Your Old Bank Account
Once you’ve gotten to this step, you can close your old account—but be sure to do it properly. Accounts left open can attract additional fees, and if these go unpaid it can affect your credit score. You’ll usually need to write a formal letter asking for the account to be closed.
Your old bank should issue a letter to you stating that your account is closed. Even still, it’s a good idea to call the bank and verify that the account is closed. At this point, you can destroy any debit or credit cards and remaining checks. But. retain your bank statements in case there are any disputes over unpaid bills.
Banks vs. Credit Unions
Switching your bank account is a great time to reassess whether a bank or a credit union is the best fit for your financial needs. While big retail banks offer the convenience of scale, their focus is on maximizing profits and dividends, rather than serving the needs of individual customers.
Therefore, it’s worth considering some of the advantages offered by credit unions, since they are not-for-profit financial co-operatives.
In addition to offering more personalized service, credit unions like Telcoe Federal Credit Union reinvest earnings to offer better rates on deposits, lower rates on loans, and fewer fees. Once you join Telcoe you are also eligible to take advantage of many different discounted and free services. Think of Telcoe as a one stop shop for all your financial wellness needs.
Make the Switch to Telcoe
At Telcoe we offer our members a diverse array of services, including:
Low-fee or no-fee checking accounts
Low or no minimum balance on accounts
Credit building and credit repair services
Wealth management and retirement planning services
Auto buying buying assistance from a personal banker
Youth accounts and certificates of deposit
Learn more about becoming a member of Telcoe Federal Credit Union.