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How to Easily Switch Banks or Credit Unions

How to Make Switching Banks or Credit Unions Easy

Make the switch empowering, not painful

Grimacing over your most recent bank statement? You’re not the only one. According to a recent survey of 9,000 banking customers globally, more than 77 percent reported dissatisfaction with their bank’s performance.

Maybe your disappointment is the result of too many fees, too few ATMs or a lack of personal service. All too often, it takes something drastic to inspire a switch. But with the number of banking choices out there, there’s no reason it has to be that way. Nor should making the switch be painful. Taking a straightforward approach to choosing a new bank or credit union is the first step. Then, with a bit of organization, you can simplify the switch.

What’s Most Important?

First, make a list of your banking needs. Separate your list into the “must-have” and “would-be-nice” categories. Top of your list might be low fees, 24/7 service, and free ATMs. Perhaps it’s the latest in mobile technology or doing business locally. Then prioritize your needs. There are several good online search tools that can help, like or Wallet Hub. These tools scout for the best accounts in your city or even across the nation based on parameters you select.

It Pays to Compare

Not all accounts are created equal: compare each institution’s offerings, interest rates, monthly fees, and balance restrictions. Sometimes it’s the hidden or recurring fees that get you. If you rely on ATMs for cash, make sure you have plenty of free access. If rewards are important, see how the debit and credit cards compare. Listen to trusted friends and family. Often, the best places to do business with are the ones that come via a personal recommendation.

No matter where you choose to move your money, ensure the institution is reputable, federally insured, and offers fraud protection. Remember, take your time. Shopping financial institutions will never negatively impact (or lower) your credit score, as some may lead you to believe.

Ready, Set, Switch

You’ve done your homework, and the decision’s made. But don’t rush the switch. The best approach, or at least one that will cause the least amount of stress, is being organized before you start. Prepare accordingly, and you shouldn’t forget a thing.

Step 1: Open your new account

Set aside an appropriate amount of time, 45 to 60 minutes, to open the account. Begin with a smaller but sufficient balance. Order your debit card, credit card, and paper checks; sign up for eStatements and all of the online perks you want. Also, ask if you can save money by refinancing any existing loans from other institutions.

Step 2: Switch your direct deposit

Transfer all incoming deposits (payroll, annuity payments, Social Security, pension, etc.) to your new account. Your employer, and anyone else making deposits to your account will need the institution’s routing and transit number plus your new account number. If you work for a larger company, your payroll department can help. They may ask for a voided check, which contains your new account information.

Step 3: Collect the last few months’ financial statements

Make a list of payments going in and out of the account. Gather vendor information from Bill Pay, and collect all payee (recipient) account numbers, such as utility, phone and cable companies, and memberships.

Step 4: Switch automatic payments and deductions

Set up new Bill Pay items with your new bank or credit union. Compare to your list of payments and recurring bills from Step 3.

Contact other companies that take payments from your account automatically. Provide them with your new account information. Also, switch all online payment methods to your new account. These may include debit or credit card or checking account information saved with PayPal, eBay, Amazon, and stores you do business with online.

Step 5: Leave a balance in your previous account for outstanding items

Leave a comfortable balance to cover anything you may have forgotten. (30 days’ pay is a suggested amount.) Consider automatic deductions, current Bill Pay items, subscription renewals, and checks that haven’t cleared yet.

Step 6: Watch for final items to clear

It may take up to 60 days, depending upon the transaction. If you see an item that goes through the old account that shouldn’t have, contact the vendor to correct it. Ensure items are clearing through the new account without a problem.

Step 7: Close your old accounts

Once all items have cleared, and the new account is running smooth, close all previous accounts, including credit cards. Be sure you’ve also communicated with joint owners or co-borrowers regarding the switch. Then, congratulate yourself on a job well done.

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