A comprehensive guide to switching to a new bank or credit union: every step you need to take at your old bank and get rolling with your new financial home.
Are you underwhelmed by your bank’s customer service, disappointed with its rates and fees, or unimpressed by its online banking tools? You’re not alone. Trust in megabanks has been low since the immediate aftermath of the 2008 recession, and a recent survey found the number of people at big banks considering a switch may double post-Covid.
As frustrated as they may be, though, most people still don’t do anything about it.
Switching banks can be a hassle, no doubt. But there are many upsides to switching to a community bank or credit union, and it doesn’t have to be that difficult.
Here’s the process, super simplified:
Open a new account
Switch your direct deposits and automatic withdrawals
Close your old account
That’s really all it is! But you may still have a few questions.
Here’s our comprehensive guide to switching to a new bank or credit union: every step you need to take at your old bank and get rolling with your new financial institution.
1. Find a local bank or credit union
The first thing you need is an exit strategy: Where are you going. If you’re ditching a megabank with tons of hidden fees and terrible customer service, you might know that a local bank or credit union may be a better option, but you might not have done much research about the options in your area.
Poll your friends and family, check online review sites, and see what people are saying about where they bank. Keep in mind the things you care about most. Do they have free checking? Good interest rates? Exceptional customer service or plenty of branch locations?
Do your due diligence and it’ll pay off. (And if you’re still not sure where to start, read our guide to finding the perfect place to bank.)
2. Get your ducks docs in a row
Whether you decide to open a new account in person or online, you’ll need some documentation. Gather necessary items like your driver’s license or state-issued identification, your Social Security number, the debit card or credit card from your current bank, and your current and previous home addresses.
(Too easy? For extra credit, make a list of all of your checking transactions, including automatic bill pay, regular debits, regularly scheduled transfers to an investment savings account, a check you’ve written that hasn’t been cashed yet... this list will come in handy later.)
3. Open an account at your new bank or credit union
Many local banks and credit unions let you apply for a new account online, or offer easy in-branch service. If you’re switching from a national chain bank to a local community financial institution, take advantage of the local bank or credit union's superior customer service right off the bat by letting them know you’re leaving your current bank, and asking what resources they can offer to help. In addition to helping with the changing banks process itself, they may offer financial advisor, identity protection, or other services.
Typically, you’ll be able to open a new account right away.
4. Move (most of) your money
Your new financial institution will let you know how to switch accounts, and how it can accept your money — via check, credit card, debit card, or a direct online transfer. Migrate your money from your old account to your new one, but be sure to leave some cash in your old account if you have automatic payments set up. You want to be sure your bills will be covered for a few months if there’s a lag in setting up automatic bill pay with your new account. You definitely don’t want to be hit with an overdraft fee on your way out of your current account.
5. Update your direct deposit information
Many employers direct deposit their employees’ paychecks into a checking or savings account. If you have any kind of direct deposit income, letting your employer know about your new bank account is the next thing you do.
Get whatever direct deposit information you need from your new bank (most will have this online), and provide this info to your employer’s payroll department. Be sure to ask how long it will take for the changes to take effect and when you can expect your paychecks to start showing up in your new account.
6. Set up autopay and other online banking services
If you have any automatic transactions, you’ll want to switch them to your new account. Think back on all the monthly or annual bills you autopay through the primary financial institution you’re leaving. Again, ask your new bank or credit union if they have any forms or tools to help with this process.
Automated payments are a great way to make sure you never miss a bill, and most banks and credit unions offer this service, as well as now-standard features like paperless billing, online banking, and digital monthly statements.
The steps for this vary, so follow the guidelines on your bank’s website, and if you’re not sure about something, call customer service for help. You’ll need basic information such as the company’s name, mailing address, phone number, and your account number with that company in order to set up the payments. Remember to cancel online and automatic payments through your old account, because soon you’ll be closing it for good!
7. Close your old account
Once you’re confident that all automatic payments and deposits have successfully transferred from your old account to your new one and all the checks you’ve written on the old account have cleared, you can go ahead and close that account. We recommend giving yourself a few months between opening your new account and closing your old bank account, just so you don’t miss any payments or get hit with any unwanted fees as you’re exiting your old bank.
The last, last step is closing your account for good. Withdraw any remaining account balance, take your money and walk.
Maybe you feel nothing at this moment, but there’s a good chance you’ll feel a strange sense of relief. Plus, you’ll have some money in your pocket! Take that to your new institution, or treat yourself to an ice cream for being smart and investing in a better banking experience.