How to Switch Banks

Just the thought of moving your money to a new financial institution can be daunting—but it doesn’t have to be, says banking expert Ken Tumin. Just follow these seven steps…

1. Select your new bank.

Determine the benefits and kinds of services that you want, and make sure the institution you are considering meets these criteria. Remember to consider credit unions, which sometimes offer more favorable terms…or a fintech or neo-bank, a “digital-first” financial firm that offers checking accounts and debit cards but has few or no physical locations.

Also: Ask if the new institution offers a “switch kit”—a package of forms and checklists that help you organize all the information you need when opening accounts with the new bank and closing accounts at your former institution.

2. Compile an inventory of your automatic payments and deposits.

Consider not only monthly transactions but also those that come in on a quarterly, biannual, semiannual and annual basis. Best: Review an entire year of transactions to ensure this list is comprehensive. Also list any digital wallets or payment services that are linked to your old account—these will need to be migrated over separately.

3. Select the type of account at the new bank.

Consider minimum balances and monthly fees. Decide whether this will be a joint account with a spouse or partner. Ask which documents you will need to prove your identity.

4. Transfer your money—but not all of it.

You will want to leave some money in your old account to cover any outstanding checks or recurring bills until the new account is fully up and running.

5. Process paperwork to redirect all automatic deposits, withdrawals and bills.

Automatic deposits—such as payments from your employer—will require separate paperwork, and there often will be a lag time of one or more payment cycles before this takes effect.

6. Maintain your old account for a transitional period.

This might entail paying monthly fees on two accounts for a short period (no longer than three months), but that is a small price to pay to avoid headaches associated with payments or deposits chasing an account that is closed or has a zero balance. To avoid fees during this interval, maintain the minimum required balance in both accounts.

7. Once the transition is complete, close your old account.

Make sure you have met the requirements imposed by your old bank for closure (these might include providing a letter or filling out a form) and ascertain whether the bank charges a fee for account closure. Request written confirmation that your old account has been closed, and keep this document for at least three years. Reminder: Shut down your old account before any inactivity fees kick in, usually at six months to a year.