Transitioning away from your current bank to a new credit union or local bank can be an intimidating prospect, but with an organized exit strategy and a commitment to your financial well-being, jumping ship to another financial institution can be a worthwhile and painless process. If you want to change banks, here’s how to do it.
Why Are You Switching Banks?
Before moving forward, it’s important to assess how your current bank does not meet your needs. Doing so will help you determine whether switching to a credit union or local bank is the right shift for you.
- Are there too many administrative fees that deter you from saving money?
- Are you interested in incentive-based products that your existing bank does not offer (e.g. rewards debit accounts?)
- Are your funds not reaching their greatest potential due to low deposit rates?
- Is the customer service and support not meeting your standards?
Understanding which factors your current bank is lacking, will lend greater perspective of your unique set of expectations and give you insight as to which credit union or local bank can serve your needs best. Once you’ve determined this, you can begin your path toward undertaking a successful financial institution switch.
Opening a New Account with a Credit Union or Local Bank
Gaining the confidence to seek out an institution that aligns with your personal interests is the most challenging part of the process — the rest simply involves planning in where you will relocate your funds. As soon as you’ve identified a credit union or local bank you would like to work with, the next step is to speak with their representative to learn more about how to get started.
It’s helpful to come prepared when meeting with the credit union or local bank representative. If after meeting with a representative, you find that the credit union or local bank is the place for your business, you may consider opening an account on the spot. Arriving prepared with the correct requirements can make for a smooth process.
Find out what the minimum requirements are for your desired account (e.g. checking account balance minimums, minimum initial deposit required, etc.) and other terms and conditions.
It is extremely helpful (and convenient for everyone involved) to come equipped with basic identification and standard documentation. Typically, credit unions and local banks will ask to see:
- Two forms of identification (e.g. driver’s license, state ID or passport)
- Your social security card
- Sometimes, a utility bill as proof of residence
- Your initial deposit
It is also beneficial to have your old bank account number and routing number on hand, should you find that you can initiate the process to setup fund transfers into your new account.
Account setup is your opportunity to order or request items like a debit card, blank checks and deposit slips if needed. Before leaving your session, ensure that you have your new account number and routing number on hand.
Interested in online banking? Find out who has the best online savings accounts.
Closing your Existing Bank Account
You may have many incoming and outgoing third-party ties to your current bank account. In order to keep maintain good standing on your obligations during the switch to a credit union or local bank, the order in which you execute the following items is essential:
Do not withdraw funds entirely: There may still be pending checks or transactions floating around that haven’t made it to the account just yet.
Check on automatic payments: If you’ve set-up automatic payments from your account, contact the companies to find out how long it will take for them to enact the account change
Redirect direct deposits: Speak to your employer’s human resources department and fill out the needed paperwork to redirect your paycheck to the new account. This process typically requires a voided check with your account number and routing number clearly displayed (temporary checks usually are not acceptable), so you may need to wait for your checks to arrive in the mail–about 14 days upon opening the new account.
Update third-party accounts: If you have your account information stored with online retailers like Amazon.com or in a PayPal account this is your chance to update your account information to link with your new credit union or local bank account.
Withdraw remaining funds & close bank account: Even though you’ve been building up to this moment, you’ll need to ensure certain loose-ends are cleaned-up. Withdraw the remainder of your funds out of the account, and request a financial statement from the bank which outlines your transactions and indicates that your account is now closed.
If you canceled and find that you still had funds in your account, your old bank should send you a check in the mail in that amount between 7-14 days after closing. Contact your previous bank if you have not received the check by this time period.
Take your financial success into your own hands by choosing to switch to the right credit union or bank for you. Transferring financial institutions might seem like a daunting process, but with a planned approach, it can be trouble-free.
