A bank account can make managing money easier, but there are situations where it may be necessary or wise to change banks. For example, you may need to move your money to a new bank if you move to a different city. In other cases, switching to a new bank may just be a matter of finding one that offers lower fees or better interest rates on savings.

Is it hard to switch banks? Not necessarily. But whatever the reason for opening a new bank account and leaving your old bank behind, there are certain things you need to do to make the transition a smooth one.

1. Finding a Bank

Before you can change banks, you first need to decide where you want to move your money. Generally, your choices include a traditional bank, credit union or an online bank.

With so many options for opening a new account, it’s helpful to have a checklist of things to look for when comparing banks. As you shop around for a new bank, considering the following can help with your decision-making:

  • Features and benefits you need or want, such as automatic bill payment or mobile check deposit
  • Fees each bank charges
  • Interest rates you can earn on savings
  • Online and mobile banking services
  • Branch and ATM locations
  • Added features or benefits (for example, some banks and credit unions make it easy to save your spare change automatically)

Consider the minimum opening deposits and minimum balance requirements at different banks. For instance, you may find a bank that doesn’t require a minimum to open an account, while another sets the threshold higher.

You may also be interested in whether you can switch banks and get money for your efforts. To get people to switch, some banks offer bonuses that allow you to earn a reward for opening a new account.

And keep in mind that you don’t have to limit yourself to one bank. You could open multiple checking or savings accounts at different banks to better fit your needs.

2. Make a List of Your Automatic Payments and Deposits

Automated bill payments, direct deposits and recurring transfers can simplify your financial life. As you switch banks, it’s essential to make sure that you properly switch over these transactions to your new accounts.

For example, you could run into a problem if your paychecks are still being sent to your old account or you have an automatic bill payment processed for a closed account. And you’d also need to change banks for Social Security direct deposit if you receive those benefits.

As you plan to change banks, make a list of:

  • Automatic deposits. This includes direct deposit of paychecks or business income, alimony or child support payments, government benefit payments and recurring transfers from linked bank accounts.
  • Automatic bill payments. This includes mortgage payments, utilities, credit cards and student loans.
  • Recurring subscription payments. This includes streaming services, gym memberships and other transactions you pay automatically.
  • Recurring transfers. This includes transfers to externally linked deposit accounts, retirement accounts and investment accounts.

You should also make a note of any places your current bank accounts are linked to online. For example, if you use a mobile wallet app to shop online, you’ll need to update your bank account or debit card information once your new account is open.

If you’ve enrolled in alert services or notifications with your current bank, turn those off. And if you use paper checks and have those set up to auto-refill, you’ll need to cancel those as well. But don’t close your account just yet. You’ll still need it to get your new account started.

3. Open a New Bank Account

Once you’ve selected a bank, you can open your new account. Many banks now allow you to open accounts online, which can be the easiest way to switch banks. If you’re getting started with a brick-and-mortar bank or credit union instead and want a more personalized experience, you could open an account at a branch or potentially do so over the phone.

Generally, to open a new bank account, you’ll need to give the bank your:

  • Name
  • Date of birth
  • Social Security number
  • Email address
  • Mailing address
  • Phone number
  • Driver’s license number or other I.D. number

If you decide to switch banks online, you’ll also need to tell the bank how you plan to fund your new account. Specifically, you’ll need to give the new bank the account number and routing number for your current bank.

Keep in mind that some online banks may require you to verify deposit information from a linked account before you can transfer funds. This involves the bank’s making one or two small test deposits into your account. Once you confirm them, you can link your old account to your new one to make the transfer.

If you want to open an account in person, you could withdraw cash from your current account to make your initial deposit. Or, if you want to deposit a larger amount, you could use a certified check or cashier’s check instead.

4. Enroll in Online and Mobile Banking

You’ve got a new bank account, but now you need to be able to access it. This is when to consider signing up for online and mobile banking—typically, these are the only options you’ll have if you decide to bank at an online-only institution.

Your bank or credit union can help you get set up with online banking. Before using this feature, you may need to enroll. Once that’s done, you can visit your bank’s website, create a user I.D. and password and log in to verify your account.

Next, you can download your new bank’s mobile app. You should be able to use the same user I.D. and password for mobile banking that you do for online banking. Depending on the bank, you may have to set up multi-factor authentication or verify your account via email or text to get started using online or mobile banking features.

5. Update Your Automatic Payments and Deposits

Once your new account is open, there’s a little more work to switch banks fully. This is when you’ll need to move all of your automatic payments and deposits over.

Before you do that, first check the list you made earlier to see if there are any recurring deposits or payments you want to cancel outright. For example, if you’ve signed up for a recurring subscription to a streaming service you no longer use, switching banks may be a prime opportunity to go ahead and get rid of it altogether.

Once you know what you want to transition and what you want to cancel, you can update your account information:

  • Start with direct deposits. If you have direct deposit set up at work for child support or alimony payments or government benefits, you’ll need to update your bank account details with each one individually. For example, you’d have to update Social Security direct deposit to change banks by logging in to your Social Security account online.
  • Reschedule automatic bill payments. Set up automatic bill payments through your new bank account. Or, if you set up automatic payments through specific billers, be sure to update your information for each one.
  • Set up recurring transfers. If you have any recurring transfers, such as deposits from checking to savings, you’ll need to set those up to occur between your new accounts.

Other small tasks you may need to do at this stage to change banks include ordering new checks if you use paper checks, setting up a new safety deposit box and updating your mobile wallet payment details.

It’s still a good idea to temporarily keep some money in your old account to ensure all of your automatic payments and deposits have carried over. Leaving the account open for at least one full billing cycle after making a move to a new bank can help you spot any recurring payments or transactions you might have missed.

6. Close Your Old Bank Account

If you’re satisfied that all of your automatic transactions have been transferred to your new account, the final step is closing your account at your old bank. Depending on the bank, you may be able to do this in person, online or over the phone.

When closing a bank account, be sure to ask for written verification that it’s closed. You’ll want to hang onto this in case your old bank allows a deposit or debit transaction to go through that ends up triggering fees. Also, ask whether there are any account closing fees. Some banks charge a fee for closing an account within a certain time frame after it’s been opened.

You’ll want to destroy any remaining paper checks you have for the account, as well as your debit card. When you get the final statement from your old bank, review it carefully to make sure there are no lingering payments or deposits you need to transfer.

Should I Switch Banks?

You may be wondering why you should even consider switching banks if it’s not prompted by a move or another life change. And you may have questions like:

  • What happens when you switch banks?
  • Is it bad to switch banks?
  • How hard is it to switch banks and can I switch banks online?

So, what happens when you change banks? Essentially, you move your money from one financial institution to another. You open new accounts and close your old ones. As discussed above, you’ll need to update your bill payments, direct deposits and other recurring transactions.

Now, is it bad to switch banks? Not if the decision to change banks benefits you. For example, switching to a new bank can offer certain advantages if:

  • You’re able to get a higher APY on deposit accounts.
  • A new bank charges lower fees.
  • You need a more comprehensive range of banking features or perks.
  • Borrowing money would be less expensive because the new bank charges fewer fees or lower interest rates.
  • A new bank has a better ATM network or more branch locations.
  • You’re interested in moving to an online bank.
  • A new bank offers a bonus for opening a new account.
  • You’re not satisfied with your current bank’s customer service.

If you find a better deal elsewhere, you could first ask your current bank or credit union if they’d be willing to match it by lowering your fees or directing you to higher interest rate deposits. If that isn’t doable, then switching banks could be the best option for making the most of your money.

Finally, is it hard to switch banks? Generally not. It’s often relatively straightforward, especially if your new bank provides a switch kit that you can use to open accounts online. Switch kits include everything you need to change banks seamlessly with as few headaches as possible. You can find bank account switch kits online and download everything you need for free. This could be the best way to change banks if you’re worried about overlooking a critical step in the process.

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Bottom Line

Whether you change banks out of necessity or because it makes sense to do so financially, it helps to know what to expect before getting started. It’s important to take time to compare banks carefully to make sure you’re choosing the right one for your financial situation. The better you understand the process, the easier it is to switch banks without feeling overwhelmed.

Frequently Asked Questions (FAQs)

Do I need to change banks when I move?

If you bank with an online bank, you shouldn’t need to change banks when you move. If you bank with a traditional bank that doesn’t offer branches or ATMs in your new location, it may be necessary to switch to a different local bank or online bank. Moving overseas may also prompt a change of banks if your current bank is not available in other countries.

Can I switch banks if I have a loan?

It’s possible to switch banks if you have a loan with your current bank. It’s important to review the loan terms first to make sure there are no penalties for doing so. Once you switch banks, you’ll need to update your loan payment information to avoid late or missed payments and subsequent credit score damage.

Do you need to change your bank after you retire?

You don’t necessarily need to change your bank after you retire, though it may be worth considering if you can take advantage of lower fees or better interest rates. If you do decide to switch banks in retirement, it’s important to update your banking information with the Social Security Administration if you’re receiving retirement benefits. This way your payments aren’t lost or delayed.

Does switching banks affect credit score?

Credit scores are based on information related to credit and debt, so switching bank accounts shouldn’t impact your scores. You may see a negative impact, however, if you switch banks but fail to update automatic payment information for credit cards or loans that results in late or missed payments. When you have an overdraft balance, switching banks could result in negative information being reported to ChexSystems, a separate credit reporting bureau for banks.