Whatever your reason for switching banks, this step-by-step guide to moving your checking or savings accounts to a new bank can keep you on track.
How to change banks
1. Choose a new bank
Banks and their nonprofit equivalent, credit unions, are key to many of our financial lives, and choosing a new one can take time.
Finding a place that has branches and ATMs near you can be important, but also look for low fees and competitive interest rates, especially on checking and savings accounts. Make sure the new bank has all the services you use at your old one. (For a breakdown, see tips on how to choose a bank.)
Opening a bank account likely won’t affect your credit score. Many banks screen potential applicants by looking at ChexSystems, a database that shows any bad banking history but no credit information. Some banks may do a soft or hard credit pull, but only the hard pull results in a dip in your credit score. This credit inquiry might occur if you apply for an overdraft protection program or line of credit when you open a checking account.
Remember that you can have accounts at more than one bank. Having accounts at multiple banks gives you access to the best qualities of different banks. For example, splitting your money between online and traditional brick-and-mortar banks will ensure you have both high interest rates and in-person support when you need it.
2. List automatic payments, deposits and services at the old bank
Even if you’re in a hurry to leave your old bank — too many fees, lousy customer service, whatever — slow down and take a strategic approach. Pull up a year’s worth of bank statements. Look for any annual subscription fees you might have lost track of and review transactions via online banking to note any of the following:
- Direct deposits
- Automatic bill payments and subscriptions (monthly or annually)
- Recurring transfers
- Linked accounts
Also note any bank services you currently use, which may include:
- Banking alerts via email or text
- Mobile app
- Paper checks
- Safe-deposit box
» Want to compare bank options? See our list of best checking accounts
3. Open your 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.
Avoid costs in the new account: Make sure you know how to avoid the monthly fee, if there is one, and keep enough money to prevent overdraft fees.
Keep some money in your old account: You should have enough money 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: Schedule future bill payments from your new account once the first direct deposit goes through.
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 card issuers, cable company, cell phone carrier — also needs to be updated. Some merchants will notify you when a payment fails, but others might not. That could cause bills to become late and pile up, which can affect your credit.
To help you compare potential new accounts, here are three high-yield savings accounts at online banks, which are federally insured like other banks.
4. Close your old account
Once you’re sure all automatic transactions have cleared, you’re ready to close your old accounts. 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.