Changing banks is not so different from moving to a new place. It’s not something you do casually, there are checklists involved, and the tidier you are, the more money you’ll save.
You probably have your reasons for switching to another bank or credit union. So here’s how to get ready and do it wisely.
1. Make a plan
Even if you’re in a hurry to leave your old bank — too many obscure fees, lousy customer service, whatever — stop and take a strategic approach. List all the parts of your life that touch or are touched by your checking and savings accounts. Start with:
- Direct deposits.
- Automatic bill payments.
- Recurring transfers.
- Linked accounts.
- Banking alerts.
- Smartphone apps.
- Text alerts.
- Paper checks.
- Safe-deposit box.
Sort through a year’s worth of bank statements to note any annual charges or items that might escape your memory.
2. Open the new account
You wouldn’t move out of your house or apartment without making sure the essentials — gas, water, electricity — are functioning at your new place. The same logic applies here. Open the new account while your old one is still open, and switch in stages.
- Keep some money in your old account: You should have enough funds in your old account to cover automatic payments or checks that haven’t cleared, and to avoid any minimum-balance fee.
- Change any direct deposits: Update your financial information at work so that your paycheck is sent to your new bank account.
- Reschedule automatic payments: Set future bill payments to reach your new account after the date on which your first direct deposit is scheduled to be received in that account.
- Check off the rest of your list: Go back to your planning list and address anything still left to do: order checks, rent a new safe-deposit box, download the bank’s mobile app and so on.
Any old account information stored with a service provider — your credit cards, cable company, cell phone carrier — also needs to be updated. Some merchants will notify you when a payment fails, but others might not, causing bills to become late and pile up, which will affect your credit.
3. Close your old account
Once you’re sure all automatic transactions have cleared, you’re ready to close your old account. The Consumer Finance Protection Bureau recommends getting a written document confirming that an account has been closed.
Banks sometimes reactivate closed accounts to fulfill automatic payments or deposits that come in, according to a 2012 report by Consumers Union in Yonkers, New York. To avoid this, the report says, “the account should be emptied and closed at the same time after all direct deposits and automatic payments have been successfully rerouted.”
If you have any doubts, talk to your old bank about its account-reopening policies.
4. Start fresh
Once you’re done with your old account, learn more about your money’s new home. Find out what features it may offer that can help you get on track with your financial goals. Stay vigilant about avoiding monthly and overdraft fees. You’ll be more likely to want to stay put in the new bank.
Melissa Lambarena is a staff writer at NerdWallet, a personal finance website. Email: firstname.lastname@example.org. NerdWallet writer Devan Goldstein contributed to this article.
This article was updated on June 8, 2016. It was originally published June 5, 2015.