Hardship Recovery

How To Switch To A New Bank

Are you ready to move your money to a new bank? Follow these five steps to streamline the process.

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Moving your cash to a new bank could be a smart move if the one you currently use isn’t cutting it.

Maybe you’re tired of the lack of ATM locations that make it almost impossible to access your money when you need it. Perhaps your current bank gouges you with ultra-high overdraft and maintenance fees. Or maybe you want to earn more interest on your savings.

Regardless of why you’re changing banks, there are some steps you’ll have to follow to complete the task. Luckily, they’re not too difficult in this day and age, so let’s jump into them now:

1. Open the new account ahead of time.

If you’re dependent on your current bank account for several payments, opening the new one a few weeks before you’ll have to use it is a good idea.

Each bank is different, so it may take some time for you to get acquainted with the new institution’s procedures. By opening your new account with some time to spare, you can learn how to use it and get everything set up without feeling rushed. If not, you could start on the wrong foot by getting hit with overdraft fees or not paying specific bills on time.

Whether opening your bank account online or in person, know that you’ll need specific documents to complete the process, such as your government-issued ID.

2. Transfer your automatic payments.

Auto pay makes it easy to avoid missing payments and damaging your credit score. If your current account has automatic payments, you’ll need to review them and transfer each over to your new account once it is up and running.

To ensure you don’t miss any payments, look over the past year of bank statements and mark off each instance of existing auto pays that must be transferred.

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Here are some examples of auto pays you may find:

  • Rent/mortgage
  • Car payment/car insurance
  • Utilities such as electric, water, and gas
  • Student or other loan payments
  • Gym or other memberships
  • Online subscriptions
  • Cable bill
  • Internet bill
  • Cell phone bill
  • Credit card payments

When updating auto pay information, try to get an email confirmation for each move. It could help if you run into any trouble later on and need evidence to avoid or remove negative reports on your credit history.

3. Update your direct deposit information.

The last thing you need when switching banks is to lack access to your paycheck. If your employer pays you via direct deposit, you’ll need to contact them to update the bank account info they have on file.

Paychecks aren’t the only direct deposits you’ll need to update. If you receive child support or any other form of payment in this way, be sure to update it as well.

4. Move your money.

With your new account open and all of the auto pay and direct deposit info updated, it’s now time to transfer your money.

Some banks allow you to transfer money to a new account for free. Others, however, may not be so accommodating.

To avoid any convenience fees, ask your old bank for a check that you can use to transfer the money.

5. Close your old bank account – but not immediately.

Wait at least one to two months to close your old bank account. As long as your automatic payments and direct deposits go through without error, you’ll be good to go.

To avoid any issues with opening new accounts in the future, make sure your old account is free of any outstanding balances.

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