How to Switch Banks

Transfer any automatic billing withdrawals from your old bank to your new bank.

If your bank charges steep fees just for the privilege of allowing you to use your own money, changing to a new bank may be a prudent financial move. Or you might need to change banks because you are moving to a location where your bank does not operate. Changing banks can be a hassle and can potentially cost you a lot of money. However, following the proper procedure can minimize the risk of problems. Consult with your financial institution for specific details on switching accounts.

Difficulty:

Moderate

Instructions

Things You'll Need

• Cash, debit card or credit card
• Routing and account number for old account
• Routing and account number for new account
• Direct deposit forms
• Bill payment account numbers

1. Determine how you will fund your new account. Many banks allow you to use cash, a debit or credit card or your old account.

2. Create a list of all automatic billing and direct deposits for your old account, including the dates for the next anticipated transactions. You will need this information when you open your new account.

3. Stop using your old account. Withdraw enough cash to cover your daily expenses until you establish your new bank account.

4. Open your new account. Ask the officer at your new bank what the procedure is to establish direct deposit and automatic billing.

5. Contact your human resources officer and relevant merchants with your new routing and account numbers. Don't forget to change online merchants such as PayPal and Amazon.

6. Close your old account promptly once all pending transactions have cleared, to avoid collecting administrative fees.

Tips & Warnings

• Some banks will assist you with the transition or take over much of the work for you. Inquire about the service before you open a new account.

• Do not close your old account until all your pending transactions have posted and cleared. Be sure your account has enough funds to cover any outstanding withdrawals.

References

• Dun and Bradstreet: The Right Time to Switch Banks; 2011
• "Daily Finance"; How to Tell If It's Time to Switch Banks; Matthew Scott; October 2010
• Omaha.com: No Free Checking? Switch Banks; February 2011
• Money Crashers; Seven Easy Steps to Switch Banks without Worry; Dawn Allcot
• Deposit Accounts.com; How to Switch to a New Bank or Credit Union; Miranda Marquit
• U.S. Bank: Make the Switch -- We Make It Easy with EZ Switch; 2011

Resources

• Center for Responsible Lending: Keep Your Balance -- a Shopper's Guide to Better Banking; 2010