How to Switch Banks

People switch banks for countless reasons — maybe you moved, got frustrated by poor customer service or found higher interest rates elsewhere.

Changing banks can be harder than you think, with more options than you might expect. You’ll need a little extra know-how to set yourself up for success. With that in mind, here’s how to switch banks in just five simple steps.

1. Find a bank.

The first step is to find a new bank. This process will look different depending on your needs and circumstances.

In general, you want a bank with:

• Convenient locations or easy online access
• Low or no fees and high interest rates on deposits
• High customer service ratings and a good reputation
• Minimum deposit and balance requirements that fit your financial situation

The U.S. has more than 4,000 banks, and many of them feature a strong combination of the benefits listed above — plus all kinds of bonus offers and conveniences. Sifting through all of these choices can be confusing.

A helpful exercise you can do is to think about why you’re leaving your old bank and which features or services are must-haves. This can help you set priorities and guide your selection.

A brick-and-mortar bank may not be your best bet, for example, if your top priority is earning the highest possible interest rate to grow your savings account. Online banks typically offer higher rates than brick-and-mortar banks because they have lower overhead costs.

2. Open an account at the new bank.

Once you decide on a bank you like, it’s time to open an account. You’ll first need to decide whether you want to open a checking account, savings account or both.

Most banks will require specific information or documentation to open an account, either in person or online. You’ll typically need:

• A valid driver’s license or state ID with photo, passport with photo or Social Security card
• Proof of address, such as a utility bill or mortgage document
• A birth certificate for minors — a parent or guardian can establish a joint or custodial account for a child

When you apply for a checking or savings account, many banks and credit unions use ChexSystems to evaluate your banking history. ChexSystems is similar to the credit bureaus but instead gathers your bank account data. Negative items can prevent you from opening an account — in that case, you could explore a second-chance bank account to rebuild your history.

Assuming you’re approved for an account, you’ll need to make sure you have a minimum deposit ready. Some banks require no minimum deposit, while others expect $25 to $100.

3. Transition your payments and deposits.

Your next step is to transfer all payments and deposits from your old account to the new account, making sure you don’t miss anything. You’ll want to leave your old account open until you’ve completed this transition.

During this stage, make sure you:

• List all automatic payments, bills, subscriptions, services and deposits paid from your old account.
• Update direct deposit information. This is typically done by completing a form from your employer or the source of the deposit.
• Reschedule automatic payments to come from the new account.
• Double-check your list of payments and deposits to make sure you haven’t forgotten any. Make sure you cross every payment and deposit from your list as you change over account information.

Keep in mind that transferring direct deposits isn’t immediate. The process can take a couple of weeks, and some companies may need longer.

Meanwhile, you can order new checks and change your mobile payment information if you use peer-to-peer payment apps like Venmo or digital wallets like Apple Pay.

4. Close the old account.

Keep money in your old account until you’re certain that all your payments have cleared. Once you’ve fully switched to the new account, you can close the old one.

You’ll typically close an account by completing a form and sending it to the bank. Check with your bank to confirm its closing process. You may be able to close your account over the phone, but you could be required to visit a branch to do so.

If you don’t receive verification of your account closure, ask your bank for it. It could come in handy if you have problems with bills or payments.

Remember to retain bank statements, whether you receive paper or electronic statements, for at least a year.

5. Verify automatic transactions.

Make sure all of your transactions have gone through successfully for at least one statement cycle. Check that everything is coming in and going out of your account as it should be. Finally, shred any debit cards or checks linked to the old account.

Now you’re ready to enjoy the benefits of your new bank!

Should I switch banks?

You might consider a change of banks for plenty of reasons. You’ll want to evaluate pros and cons before you make a move.

If you’re wondering whether to switch banks, you can compare interest rates, features and benefits to ensure this makes sense for you. Look at a variety of financial institutions, from smaller regional banks to online institutions and big household names.

However, know that changing banks on a dime is never a good idea. It’s a multi-step process that can be daunting, so you should only proceed if you’re certain that the new bank offers an advantage.

Frequently asked questions

How long does it take to switch banks?

Switching banks can take anywhere from a few hours to a month, depending on how much you need to do to transfer your payments and deposits. You’ll want to leave your old account open until you’ve made sure that everything has transferred.

Does switching banks hurt your credit?

Generally, switching banks won’t hurt your credit score, but check your bank’s terms and conditions to be certain. Opening other accounts, like credit cards or loans, is more likely to affect your score.

Can I switch banks if I have a loan?

You may be able to switch banks if you have a loan with your current bank. While your loan could be transferred to your new bank, you could also be required to pay it back before you move on. Contact both banks to discuss your options.

Do I need to change banks when I move?

If your bank doesn’t have branches in multiple states and a wide network of ATMs or offer online banking services, you might need to make a change. You might also want to switch banks if you prefer in-person service and your bank doesn’t have branches in your new location.