How to Switch to a New Bank or Credit Union

With so many financial institutions out there, it is little surprise if you find a bank or credit union that you like better than your current financial institution. From looking for better rates on financial products and services, to avoiding fees, there are a number of reasons that you might decide to switch to a new financial institution. Before you switch, though, you need to make sure you are ready for the move.

Is Your New Bank or Credit Union Really Better?

Before you move your money, you want to make sure that your new financial institution really is a better choice. Do a comparison of the two, and make sure that you really are benefitting by making the move. Consider your goals, and what you want the bank or credit union to accomplish on your behalf. Someone who is just looking for an account to pay bills from will have different goals from someone who wants to access to higher CD rates. Make sure you understand your needs, and ensure that the new bank or credit union will actually meet them.

On top of that, you will need to compare fees, account requirements and yields. Once you know your goals, compare the products and services offered by the institutions on the products and services you want – and be sure to know whether or not you have to get other products and services in order to get what you want. If, after making the comparison, you decide that you really do want to make the move, get ready.

Opening a New Account

Find out what is necessary to open a new account. Some financial institutions will allow you to open an account entirely online or over the phone, without ever having to go in and open an account in person. In some cases, you might have to go in personally to complete some paperwork. When you open an account, you will need basic identifying information, including your Social Security Number and address. You might also need to answer questions about your plans for the account. Be prepared with forms of ID, and other documentation as needed.

You will also need to fund your new account in many cases. Online, you can usually submit your current bank account number and the bank’s routing number in order to have the money transferred. You might also need this information if you go to a bank in person, and you are doing a wire transfer, you might still need this information. Before you go in, call the bank or credit union so you know exactly what you need to open an account, from cash to account numbers.

Before You Close Your Old Account

Making the transition can be one of the most difficult parts of switching banks or credit unions – especially if you have automatic withdrawals coming out of your account. Changing over requires that your new account has sufficient funds, while ensuring that all your pending debits are covered by the money in your old account.

After you open your new account, you should get the routing number for the bank, along with your new bank account number. Call the companies that debit your account regularly. Ask how much time is needed to change the account the money is taken from. This time period is usually (but not always) between 14 and 30 days. The companies you do business with will need to know that you are switching accounts, and they will need the information about your new bank account.

Once you know the timeframe for the company making the switch, check to see when your regularly scheduled debit is coming out. Chances are that you will have some debits coming out after you are making the switch. Make a list of the debits you expect to come out, and when they are taken out. After you have confirmed the switch with companies taking the money, keep track of which debits have cleared. Do not close your account until all debits are cleared.

You will also you need to make sure your direct deposits are properly directed. Check with your human resources department to find out what you need to do in order to change the direct deposit. In addition to the new bank or credit union account number and the routing number for the new financial institution, you might also need a canceled check. If this is the case, you might need to wait until you have checks to make the change. Find out what you will need for direct deposits, and make arrangements.

Consider, also, other finance related sites that are linked to your old bank or credit union account. You will have to change information in your personal finance web applications, as well as for your third party payment providers like PayPal. If you have your bank account information saved at sites you frequently buy products and services from, you will also have to change that information.

After you have made sure that everything is linked to your new bank account, and after it appears that everything is running smoothly, you can withdraw money from your old bank account and close the account if that is what you have decided to do with it. You should get a final statement from the bank, detailing your transaction, and indicating that you have closed the account. If there is still money in the account, and you should also get a check in the mail for what is left. Look for your final check and your final statement (these items are likely to come separately) seven to 14 days after you close your account. If you do not receive them, call the financial institution and find out why.

In some cases, you might want to keep the account open at your old bank or financial institution for some reason. If that is the case, make sure you understand account minimum requirements, and be sure to leave enough money in the account so that you aren’t triggering fees for not maintaining a minimum, and continue to check the account statements as they come.

Moving your money to a new financial institution takes some time and effort. However, if you are organized and know what you need moved, and how the process works, it should be relatively painless.