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Bank Switch Kit and Checklist

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With Wells Fargo changing their policies to be less consumer-oriented this week, I’ve received several questions about the logistics switching banks. In previous decades, closing your account at one bank and opening an account at another was a simple process. All that was required was to walk into one branch, ask to close your account, provide some proof of your identity, take your cash or cashier’s check to a different location, and open a new account with your deposit.

With automated banking, direct deposits, and pre-authorized electronic withdrawals and online bill payments, taking your business from one bank to another can be a hassle. There is a financial risk involved; if you neglect to change your banking information with a vendor, your payment could bounce, and you could be subject to late fees, insufficient fund fees, and perhaps even cancellation of your services.

Broken piggy bankIf you’ve taken a modern approach to banking, with automated and electronic payments, you’ll need to start planning in advance. Here are the priorities, if you’ve already chosen your new bank. To compare banks, read through the reviews available here on Consumerism Commentary, but also consider your local community banks and credit unions.

Download the Consumerism Commentary Bank Switch Kit to help you organize the information you’ll need. The link is at the bottom of this article.

Step 1. Open the new account with appropriate minimums.

Before you can change the account information stored with companies that bill you, you’ll need to have your new bank’s routing (ABA) number and your new account number. For a short period of time, both your old bank account and your new bank account will be active. This ensures that all your payments go through and all your deposits are received during the transition period. Determine which types of accounts you need at your new bank, and have the minimum required to open the accounts ready to deposit.

If you had debit cards, ATM cards, check cards, deposit slips, or paper checks with your old account, don’t forget to order the same when you open your new account.

Download the Bank Switch Kit for a convenient way to keep track of your new banking information.

Step 2. Change your direct deposit information.

It could take as many as two pay periods for your new direct deposit instructions to take effect. It could take two to four weeks after requesting the change to your direct deposit before you receive a pay check at your new bank. Most employers have their own forms for submitting changes to direct deposit, but I’ve included a generic form in the Bank Switch Kit that most human resources should be able to accept. Many employers have the ability to accept direct deposit instructions online, so check with your employer as soon as possible.

This is the slowest aspect of moving from one bank to another, so start as soon as you’ve opened your new accounts.

Step 3. Adjust your automated bill payments.

If you’re living in the twenty-first century, you’ve likely configured many of your monthly financial obligations to withdraw money from your bank accounts. You’ll need to change this banking information one vendor at a time without missing any possible automated withdrawals. Review your past three or four banking statements to help your recollection of all the bills that are paid automatically. Here’s a list of some of the most common bills that allow automated payments from your bank accounts.

  • Your rent or mortgage.
  • Your power bills (electricity or gas).
  • Your telephone bills (land line and mobile phone).
  • Your water and sewer bills.
  • Your property taxes.
  • Your income taxes, if you have enrolled in the Electronic Federal Tax Payment System (EFTPS) or your state’s electronic payment system.
  • Your car, home, and life insurance.
  • Your other insurance payments.
  • Your credit card bills.
  • Your payments to student loans.
  • Your payments to car loans.

The downloadable bank switch kit has a checklist where you can indicate the date you called to have your banking information changed. When you call, email, or complete this change online, make sure you know when the changes will take effect. Most of the time, the change is immediate, but if you have a payment already pending using your old bank account’s information, it might not be until the following month that the vendor applies the new banking information.

If you’ve opened your new bank account with just the minimum required to avoid fees, keep in mind that you may need to transfer more money from your to cover your bills.

Step 4. Update any linked bank accounts or investments.

The ability to begin investing using automated bank transfers has helped many people begin to save for retirement — or the future in general — without having a large sum to devote to the investment immediately. It’s easy to forget about these investments and transfers. I have had a weekly $15 transfer from my primary checking account to another bank’s savings account for years, and it would be easy to forget this without reviewing my transactions each month. Updating information regarding your linked accounts serves two purposes:

  • to ensure your accounts don’t try to send money to or withdraw money from the account you intend to close, and
  • to ensure you don’t miss any saving or investment opportunities as you rearrange your bank accounts.

First, as mentioned above, link the new bank account to your old bank account to ensure you can transfer money to your new account at will. This will ensure you have enough funds in the account to cover all the bills you’ve transitioned in the previous step. Keep in mind that savings accounts are limited to six on-demand withdrawals per month. If you exceed that number, the bank may charge you fees or close your account before you’re ready.

Pay attention to your automated investments to your IRA, transfers to your high-yield savings accounts, and investments to your kids’ education funds. Download the Bank Switch Kit for a complete list of possible linked accounts.

Step 5. Wait and close your old bank account.

After you’ve taken the time to ensure that your old bank account has been inactive and will not expect any new deposits or withdrawals, follow your bank’s process for closing your account. In most cases, you can walk into any branch with proper identification for closing your account, but in some cases, banks require you call a telephone number. If that is the case, they might want you to talk to a “retention specialist” who will do his or her best to keep you from closing your account, perhaps by offering you a better deal than you may be receiving. It’s best to ignore these offers and stick to your resolution.

If you are required to close your account by phone or by mail, the only way you may be able to receive your deposited money is through a check sent to the address your bank has on file for your account. This is an imperfect process; it would be much better to walk into a branch and walk out with your money. It would frighten me if I had to close a bank account with a significant sum of money and wait for a check for the amount to arrive in the mail.

Once you’ve received the check, make sure the bank has provided the full balance. Your balance at the end of the statement or online should be zero. Ensure you’ve received any accrued interest your account would have earned. In some cases, you may need to time the closing of your bank account to ensure you don’t miss on any substantial interest that might be due to you if your bank does not accrue interest on a daily basis.

The Consumerism Commentary Bank Switch Kit available for download includes a generic letter you may send to your bank in order to close your account.

Step 6. Destroy old forms.

Shred any debit cards and deposit slips associated with your old account once you receive confirmation that your old bank has closed your account. Get rid of your paper checks and any endorsement stamps that you may have that include your bank number.

With this step, you can celebrate the moment you are now free from a relationship you are better off without. Don’t forget to monitor your new account and your bills closely over the next few months to ensure you haven’t missed anything. If you find a problem quickly, you may be able to resolve it without needing to pay any penalties (or have penalties reversed if they are charged automatically).

Download the Bank Switch Kit and Checklist Here

Bank Switch Kit and ChecklistDownload the Consumerism Commentary Bank Switch Kit (version 1.0α, February 14, 2012). Adobe Reader or another program that displays and prints Portable Document Format (PDF) files is required.

This is a work in progress. Please feel free to share your feedback. I’ll continue to revise the Kit to improve it for more consumers who wish to leave one bank behind in favor of another financial institution, whether a national, regional, or community bank or a credit union.

Photo: Images_of_Money

Updated February 15, 2012 and originally published February 14, 2012. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 12 comments… read them below or add one }

avatar Money Beagle

When we switched, I did pretty much everything on the list. The key is waiting to make sure everything clears, even up to a year. You also should leave yourself a small cushion just in case any payments do go through so that you’re not left with a hefty Non-Sufficient funds charge.

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avatar Jeff Crews

I recently switched my bank accounts. I had an account setup with another back for a couple months. When I decided it was time, I went into my first bank, got all my money, and cancelled. I was done in 15 minutes. 5 of those minutes were given to the bank trying to persuade me not to leave.

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avatar Jenna, Adaptu Community Manager

What a great checklist! Thanks for sharing.

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avatar krantcents

Excellent checklist! Keeping to a checklist will keep you out of trouble.

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avatar Maggie@SquarePennies

Wonderfully helpful checklist! Unfortunately, many of us need this. Thanks, Flexo!

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avatar Ceecee ♦53 (Newbie)

Having to have the accounts overlap each other seems inevitable these days. This is the downside of online bill paying and accounts. Makes you realize what good records you have to keep regarding things linked to your account.

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avatar Carl Lassegue

Great checklist! All the electronic payments make life easier when we use the accounts but they can make it a lot harder when switching or closing bank accounts.

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avatar John Bartal

I’ve been thinking about switching banks recently and this list has answered a lot of my questions without me having to set foot inside the bank! Thanks so much for this!

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avatar qixx ♦1,895 (Half-Dollar)

Let’s just hope i don’t need this any time soon. I opened my ING Direct account back before Capital One bought ING. I’m not a fan of Capital One and hope they don’t screw up ING. Just keep this page easy to find so if i need it.

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avatar Shannon-ReadyForZero

I was just reading your article “Banks Could Make It Easier to Close Accounts” and followed the link to this list. This is awesome! If I were to close my bank account before reading this, I’m sure I’d forget to do half of what you mention – especially the direct deposit transfer. Thanks for putting this together, it’s a great tool to have!

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avatar Luke Landes ♦127,490 (Platinum)

Thanks, Shannon. I’m glad you like it. Please feel free to share if you believe it’s worthwhile!

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avatar Shannon-ReadyForZero

I definitely will!

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