Want to Change Banks? 9 Tips for a Smooth Transition

Maybe you’ve wanted to change banks for some time now, or perhaps you’re in the process of making the switch. Many consumers feel that banks have become less hospitable in recent years, so you’re not alone if you feel it’s time to move on.

Regardless of why you want to change banks, follow these tips to make a smooth transition:

1. Finding a new bank. It only makes sense to find a new bank before you close your old account. There are many things to consider: fees, location, online bill paying, and customer service are all important factors. Be sure that your new bank has all the features you need and is conveniently located.

Create a short list of options and compare the different offerings and how these elements are relevant to you.  You don’t need a bank account with bells and whistles that you’ll never use or aren’t worth the indirect cost. For example, while interest checking sounds great, what are the requirements for maintaining it without a penalty to your account? Do you have to keep a minimum balance at a low rate rather than using a second higher yielding money market or savings account with a different bank?  In our low interest rate environment, it might it be better to go with a no interest checking account without restrictions.

2. Consider options for transferring  and consolidating your debt.  Consider if the new bank is a good source for future lending, such as for mortgages, refinancing, auto loans, credit cards, etc. Might there be an advantage to have your credit cards and loans at your new bank? In this day of difficult credit lines, you might not be able to transfer everything, but it never hurts to ask. Often, I find credit unions are a great source for both your core banking needs and as a lending source. So be sure to investigate your credit union options.

3. Find out in advance how long it will take before you have access to your funds. Many times, deposits in new accounts (even cash deposits) are held for a while in the name of security. Be sure you know how long you’re going to have to wait. One solution to help you get past the waiting period is to only transfer half of your money to the new account and wait until the holding period is over to transfer the remainder.

4. Opening your new account. Before canceling your old account, make sure you obtain or order everything you need, such as a debit card and checks. You might not have written a check in years, but you’ll need a check and deposit slip to set up your direct deposit.  When possible, get the business card of the person that helps you set up the account. They might be a better contact to have than the standard customer service number. If you are working with an online bank, ask for the reps name and if they have a special reference number assigned to them and/or the account opening.

5. Consider setting up your direct deposit. Make contact with your human resources or payroll department and give them your new account information. You’ll probably need a check and deposit slip to set up direct deposit of your paychecks to your new account; however, make sure to contact your new bank before giving instructions to your payroll since some banks use different routing numbers for direct deposit transactions.  It can take longer than you might think to get this started, so be sure to ask your employer for an estimated time frame.

6. Move your bill payments over to you new account. If you pay your bills electronically, move the payments over to the new bank. If there are any payments that are automatically deducted from your old account, make sure to notify those creditors and provide them with the new account information. If you pay bills on other creditors’ sites, you may need to verify your new account with their system before making additional payments.  Be prepared to add your new account and in some cases verify the account is your own. Many creditors will make small deposits into your account which you need to report back so they can confirm your ownership of the account. Make sure to follow through on these steps to prevent headaches later on.

7. Set up automatic account alerts.  A great way to monitor your account is to receive  automatic email and/or mobile alerts for certain activities.  I have mine set up to receive an email in the morning that shows the previous day activity and pending deposits. This way overnight summary of activity so in the morning I can see if anything seems out of order.  plus an immediate alert for any transaction that exceeds a specific dollar amount.

8. Close your old account. This is optional as you may want to maintain your old account as a secondary back up provided there are no associated fees. However, if you just want to simplify things, you can close your old account after everything is set up at your new bank. Just be sure that any checks and other outstanding payments have cleared the account before you close it.

9. Provide worthwhile feedback. Be prepared for your old bank to try to talk you out of leaving. Be polite but be firm.You’ll be asked why you’re closing your account. Tell them the truth. Feel free to tell them that the fees were too high or that the interest rates are better at the new bank or their customer service was lacking. It’s unlikely that your feedback will change anything, but if enough people feel the same way, maybe they’ll get their act together.

Opening a new bank account can be a time consuming process, but if you’re not happy with your current bank, don’t hesitate to see if you can find something better. Think about what you need in a bank and then go find it. Following the steps in this article will make the transition go more smoothly.