Five Things You Should Know Before Switching Banks
For some of us, being presented with the idea of change can come with hesitation, and when the change is changing banks, this can seem downright intimidating. However, switching banking institutions doesn't have to be daunting. In fact, it can be both financially beneficial and responsible.
According to experts, switching banks can be considered a good move to saving more money. "Switching your bank could deliver a number of benefits, including better interest rates on your deposit accounts or a better customer experience," says Poulomi Damany, financial specialist, general manager at Credit Karma Money and Tax, who insists that it doesn't have to be complicated if you follow these steps.
Research your options.
Researching the type of bank you'd prefer is the first step. According to our expert, there are a variety of bank options: big banks, small local banks, online banks, and credit unions. In the end, your financial needs and goals will dictate your choice. "Take a close look at things like fees, interest rates, locations, and more," adds Damany. "For example, if you want to be able to bank on your phone through an app, like Credit Karma Money, make sure to ask if that's an option before signing up."
Know what's expected when you open a new account.
The next step is opening a new account at your new bank. This way, you have a designated space to move your assets from your previous bank. Damany shares this can be done in-person or easily online. You will need two forms of ID as well as money for your first deposit. It's worth noting that, after determining how much money you wish to put in the account, you should look at the associated fees or even perks that are offered to you as a new account holder.
Transfer your balances.
After your new bank has been selected and an account created, it's time to move your assets. Damany shares there is more than one way to do so: the first being writing a check, drawing on your old account, and deposited into your new one; a second method is doing an online money transfer. However, keep in mind some banks charge fees for online transfers.
Consider if you have saved enough money.
Damany recommends account holders leave enough money in their former bank's accounts to cover any potential outstanding checks, automated payments, and pending transactions. Remember to cancel all of your automated payments from your old account and update payments to come from your latest account. This entails setting up new accounts for direct deposits and any benefits such as social security.
You'll need to finalize any transactions in progress.
Soon after any outstanding transactions have cleared, and new transactions or direct deposit information has been established, you can successfully close your former account at your former bank and move any remaining balance to your new account. "Once your money arrives in the new account, it's time to take the final step and close the old one," explains Damany. "Call your old bank or visit one of their branch locations to make the request. Your old bank may require you to settle any overdrawn accounts before doing so, and watch out for any fees they might charge."