Finance Globe

U.S. financial and economic topics from several finance writers.
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Steps to Switching Banks

In the past few years, big banks have become so unattractive that many consumers switched to local banks and credit unions. Not everyone who dislikes their bank was willing to go through the trouble of moving their money elsewhere. According to a recent ConsumerReports.org survey, 63% respondents considered switching but didn’t go through with it because of the trouble it would take to transfer payments and deposits.

Sure, switching banks is tedious, but in the end, you’ll probably be happier that you did it. You may find it easier if you plan step-by-step how you’re going to make the switch.

Wait until all outstanding transactions have cleared. For a certain amount of time, any transactions that come through after you close your account will cause the account to re-open. If you don’t have the money in the account to cover the transaction, you’ll have to pay overdraft charges. And your bank may not give you timely notice of the transaction, the fee, or the fact that your account has been reopened.

Before you close your account, make sure all transactions have completed. Once you’ve closed your account, avoid writing new checks or making new debit card purchases against the account.

Withdraw or transfer your money from the account so you have a zero balance. Depending on your bank policies, you may have to visit the bank in person to close the account. That’s the perfect time to clear out your account balance. You can withdraw the balance in cash, or get a cashier’s check (typically for a fee) if you have a large balance. Alternatively, you can transfer the balance to another account. You’ll have to pay a fee for the transfer, but be advised, it's generally more expensive than the fee for a cashier’s check.

Note that if you leave the account open after you’ve withdrawn your money, you may have to pay an account maintenance fee for failing to maintain the minimum balance.

Cancel any payments set to automatically debit from that account. Use a recent bank statement or your online transaction history to get a list of payments that are automatically debited from your checking account. Then, one by one, contact those billers and update them with your new account information. If you need to, set the payments to manual for a couple of months until your new account is established.

Be sure to also set a few reminders in your calendar or smartphone so you won’t forget to make those payments. They’ll be easier to forget since you’re used to having them paid automatically.

Shred the old checks and debit card. Make sure you properly dispose of the checks and debit card associated with your old account. This keeps you from mistakenly making a new transaction that would reopen your account. It also reduces the risk of fraud against your account.

If you have the debit card number stored in any website, like Amazon.com, PayPal or iTunes, be sure to delete it or change it to a different card.

Change your direct deposit. If you’re closing the account to which your employer deposits your pay, be sure to update the payroll department with your new routing number and checking account information. If you don’t have a new account, change your payment method to paper check to be sure your money doesn’t get deposited into your old account.

Depending on your bank, you may incur a fee for closing your account within 90 to 180 days after you’ve opened it. Also, if you have multiple accounts with a single bank – e.g. checking account, savings account, credit card – it may be harder to leave. You'll have to consider whether it's better to stay with a bank that's no longer serving your needs or to cut all ties, no matter how difficult it may be.

Source: ConsumerReports.org
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Thursday, 22 August 2019

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