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One aspect of self-care is all about leaving bad relationships behind.
If we apply this idea to our financial lives, this might mean breaking up with your bank if they’ve fallen short of expectations or failed to deliver the top-notch service you deserve. Perhaps your bank has been increasing fees over the years for every little basic service. Whatever the case may be, you don’t have to put up with a bad banking relationship.
If you’ve been thinking about switching banks but don’t know how to get started, here are four steps that can help ensure a smooth transition.
When it comes to switching banks, you have plenty of choices. With all the options that are out there, you will need to do your research and decide which bank can best cater to your needs.
One question you might want to ask yourself first is whether you need to move all your accounts over to a new bank. Short answer: you don’t.
You might already be happy with your current checking account and want to leave that where it is. Maybe you’re simply interested in moving your savings into a high-yield savings account at a new bank that offers a higher APY.
Whether you’re moving everything or just one particular account, you would want to compare the products, services and features from competing banks to make sure you’re getting the best offers on the market. Basically, you need to shop around.
For example, some banks might throw in a cash bonus for new customers if they meet certain requirements, guarantee low (or no) fees, or offer competitive interest rates, while others might brag about the size of their ATM networks or their super user-friendly mobile apps. All this is to entice you to sign up for an account.
It’s important to pay attention to any requirements you need to meet in order to maintain an account or be eligible for certain benefits. These might include things like minimum balance and initial deposits. For instance, some banks might require you to maintain a certain daily account balance in order to waive your monthly account maintenance fees.
If you’re ever unsure about the terms and conditions of opening a new account, don’t be shy about asking questions. Switching bank accounts takes work, and you don’t want to jump into a new banking relationship only to regret it soon after.
This is why customer service and a bank’s reputation are also just as important when you’re shopping for a new bank. In short, be picky and find a banking partner that deserves you and your business.
Found a bank and ready to make your big move? Great! To open a new bank account, here’s what you’re typically required to provide:
Once the paperwork is done, you usually have to fund your new account with an initial deposit within a certain number of days. The required amount differs from bank to bank. So it’s a good idea to confirm the opening deposit requirement. If an initial deposit is required right away, make sure you have enough money on hand to open the account. Generally, you may fund the account with cash, a check, or an electronic funds transfer.
Important: Keep enough money in your old account to cover any outstanding checks or upcoming automatic payments. The last thing you want is to be dinged or penalized for failing to pay certain bills due to insufficient funds.
Once you have the new account up and running, it’s time to make a list of all the automatic deposits and withdrawals coming in and out of your old account.
What we mean are things like automatic bill payments, recurring transfers and direct deposits – these might include:
If you’re all about automating your finances, your checklist will likely run long, and this step could be the most time-consuming one. But it’s definitely well worth the effort because you wouldn’t want any payments to fall through the cracks as you transition between your old and new accounts.
With a list of all the automatic deposits and withdrawals swirling in your old account, you can begin to redirect these payments to the new account.
For direct deposits, you usually need to give your new account information to your employer to make the switch.
The same goes for any online bill payment options you’ve signed up for. You would need to update your payment settings with each company where you use autopay, so that they can withdraw money from your new account instead of the old one.
Keep in mind to allow some time for your automatic payment settings to kick in. It could take a month or so for these account changes to go into effect, so keep your older account open and funded until you can confirm the switch is official.
You’re ready to close your old banking account after you’re able to confirm that all your automatic payments and deposits have been rerouted to your new account.
Once that’s set, you can transfer what’s left in the account to your new account. After the transfer clears, you can close the old account. Typically, you may call your bank to request the closing – they can then walk you through the steps, which may vary from bank to bank.
For your records, the Consumer Financial Protection Bureau recommends getting a written confirmation from your bank that the account is officially closed.
This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this site were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA or any of their affiliates, subsidiaries or divisions.