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How To Switch Banks: An Easy Step-By-Step Guide

How To Switch Banks: An Easy Step-By-Step Guide

Follow these steps for switching banks painlessly.

Bob Haegele  Thu, April 4, 2024

Switching banks might seem like a daunting task. It means creating new accounts, updating automatic payments, and getting accustomed to your new bank’s policies and features. Even so, switching banks is sometimes necessary — and it could help you save money.

How? Perhaps other banks have lower fees or pay higher interest rates on their accounts. For instance, according to the Federal Reserve, the average national deposit rate on savings accounts was just 0.47% as of March 18, 2024. However, some high-yield savings accounts pay over 5% APY.

Whether you’re looking to switch due to better rates, lower fees, or some other reason, this guide will cover all the steps you need to take.

How to switch banks

The process of switching banks isn’t difficult if you follow the right steps. Here’s how to make the switch.

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Step 1: Research Financial Institutions

If you’re thinking about switching banks, you probably already have one or two in mind. However, you should clearly understand why you plan to switch. Are you switching due to higher interest rates, lower fees, or better security? This will help guide your research so you can target banks with the right features.

Once you know why you want to switch, look into local banks, credit unions, and online banks. During your search, target financial institutions with features that motivate you to switch. Some banks may offer new customer promotions that offer a small reward for opening an account.

Step 2: Open Your New Account

Once you are ready to open your new account, gather the documentation you need to apply. This might include your driver’s license or passport for identity verification, proof of address, and Social Security number.

Based on your needs, decide which type of account you will open, such as a checking or savings account. Most banks and credit unions let you apply online, but you might also decide to open an account in person.

Fill out the form with all necessary information and submit it. Barring any issues, your new account will be open right away.

Step 3: Transition Automatic Payments And Deposits

An important step we don’t always consider is transferring your automatic payments and deposits to your new account. If any of these transactions fail, you could accidentally overdraft or delay an important payment.

First, make a list of all your automatic payments and transfers. These might include rent or mortgage payments, utilities, streaming services, and direct deposits from your employer. Don’t forget about automatic transfers that happen less often, like quarterly insurance premiums or annual dues.

Then, update your automatic transfers by visiting the provider’s website or app and updating your account with the new bank account information. The change may sometimes take one or two billing cycles to take effect.

Step 4: Transfer Your Money

https://news.yahoo.com/finance/personal-finance/how-to-switch-banks-185937891.html

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