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How to Switch to a New Bank or Credit Union

Choose a bank with low fees and high interest rates. List bill payments, deposits and services from the old bank. Open the new account, then close the old.
Dec. 10, 2019
Banking, Banking News, Savings Accounts
How to Switch to a New Bank or Credit Union
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Maybe you’re after a higher interest rate. Maybe you’re moving and want a bank with more locations in your new area. Or maybe you’re just fed up with bad customer service and want to take your business elsewhere.

Whatever the reason, switching your bank doesn’t have to be a hassle. Read on for our guide to moving your checking or savings accounts to a new financial institution.

1. Figure out where you want to open your new account

For most of us, banks and credit unions, their not-for-profit equivalents, are key to our financial lives. But with so many options, how do you choose a new one when your old one no longer suits your needs?

  • Think about what features you want. Finding a place that has branches and ATMs near you might be important, or maybe you’d rather go with an online bank that has high interest rates and a great ATM fee reimbursement program. Whether it’s brick-and-mortar or online-only, you’ll want to find a bank that has low fees and high interest rates, especially on checking and savings accounts. Make sure the new bank has all the services you want. (For a breakdown, see tips on how to choose a bank.)
  • Remember you don’t need to have all your accounts in one place. If you’re open to a bit of juggling, you can optimize your finances with multiple accounts at different banks. For example, you can take advantage of a high annual percentage yield with an online savings account while keeping a checking account open at a traditional bank so that you can have in-person customer service when you need it. Keep the number of accounts you have manageable to avoid accidental overdraws. If keeping your accounts under one roof is important to you, check out our list of best banks for checking and savings accounts.

2. Open an account at your new bank

Most banks make it pretty easy to open a checking or savings account online or in person. You’ll typically need to supply some basic personal information and documents, like your name, address, a government-issued photo ID and Social Security number. If the bank requires it, you’ll need to transfer some funds into your new account. Often this can be done electronically from your old account at another bank (as long as it’s still open), but you can also deposit cash or a check.

  • Your credit score probably won’t be checked. Many banks screen potential applicants by looking at ChexSystems, a database that shows negative banking history but no credit information. There are some banks that may do a soft or hard credit pull, but only the hard pull results in a usually short-lived 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.
  • Make sure you meet the minimum deposit requirement. While most banks have reasonable deposit requirements for opening a new account and earning interest — usually in the range of $0-$100 — some require thousands of dollars. Make sure you have enough money to get started before you open an account.

3. Make a list of subscriptions, automatic payments, deposits and services at your old bank

For a seamless transition of all your old automatic services to your new bank account, pull up a year’s worth of transaction history (to surface any annual subscription fee you might have lost track of) 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

4. Begin transitioning your cash and service payments to 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.

  1. Keep some money in your old account. You should have enough funds in your old account to avoid a minimum-balance fee and to cover any automatic payments or checks that haven’t cleared.
  2. Change any direct deposits. Update your financial information at work so that your paycheck is sent to your new bank account.
  3. Reschedule automatic payments. Schedule future bill payments from your new account once the first direct deposit goes through.
  4. 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 can affect your credit.

5. 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.

When it comes to closing the account, you may have a few options of how to do it, including over the phone, in a written request or in person. Be aware your bank probably doesn’t want to lose you as a customer and may try to talk you out of leaving.

Banks also sometimes reactivate closed accounts to fulfill automatic payments or deposits that come in, according to a 2012 report by the nonprofit Consumers Union. 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.

6. Enjoy your new account and double check that all your autopays have transferred

Once you’re done with your old account, continue to learn more about your money’s new home. Take advantage of the features it may offer that can help you get on track with your financial goals, and stay vigilant about avoiding overdraft fees and monthly costs.

Even if you made sure to transfer all your autopays before closing your old account, you’ll want to make sure the transfers were successful by checking your monthly statements.