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Millions of Americans are planning to switch banks this year – a major factor was the recent FinTech and Yotta debacle.
If you've recently considered switching banks, you're not alone.
The good news is that there are many banking options available. You need to decide which option is best for your financial situation. Although switching is easy, it can take some time, so it's important to choose a bank that will meet your needs in the long term.
Here are step-by-step instructions to help you change or move your bench.
Discover your banking options
There is usually an impetus for the desire to change banks.
Maybe you've moved and there aren't many branches nearby, or you don't want to pay a monthly fee for your checking account, or you don't agree with your bank's investment decisions from a value perspective. Whatever the reason, make a list of the features you want in a new bank.
You may want to find a socially responsible bank, a checking account that earns interest and has minimal fees. Before you choose a bank account, take the time to thoroughly consider your options.
Do you want to see the best online banks, rated by
The college investor?
Below is a quick comparison of bank accounts we have reviewed in the past.
Fintech vs. Bank
One of the main reasons people are opening new bank accounts lately is the FinTech crisis. To bring you up to speed, over 200,000 people have put money in Yotta because their tech company went bankrupt.
The scary thing is that none of the regulators (Federal Reserve, FDIC, etc.) have stepped in to help people, so this is a big warning that you may NOT want to use a FinTech as your primary bank. We agree.
We recommend that everyone have a direct, FDIC-insured bank account as their primary bank. And there are good, fee-free options (the ones in our list above are all free and at FDIC-insured banks).
Also check out our list of the best free checking accounts to see your options.
Start using your new account
After you open your account, you can start using it right away. You will need to transfer money from your old account to your new account. Although there may be some back and forth in transferring your funds to pay your bills, the full transition to the new account shouldn't take too long.
Change your direct deposit
In order to use your account regularly, you will need to transfer your earnings to this new bank account.
If you are paid via direct deposit, speak to your employer's HR or payroll department about changing the information on file. When making the switch, remember to ask how long it will take for the change to take effect. If you are self-employed, make the change in your billing systems if you use them. Or you may need to contact your clients directly.
But your employer may not be the only source of income you should consider redirecting. Some other sources of income to consider include:
- goverment aid
- Pension income
- Pensions
- Investment returns
Change the bills of your old bank account
In addition to switching your income, you'll also need to update any automatic bill payments. While you probably have a good idea of what bills are being paid from your account, you should take a close look at the transactions for your account over the past six months.
Once you've identified all of your automatic payments, change the payment information to your new account. When updating this information, make sure your new account has enough funds to cover the upcoming automatic payments.
In addition to automatic payments, check which shopping platforms are linked to your old account. For example, a random purchase on PayPal could be linked to your old account. Take the time to transfer all of this payment information.
Monitor your old account
It's tempting to close your old account immediately after opening your new one, but it's a good idea to keep the old account open for a while. Transitioning too quickly could mean you accidentally leave bills unpaid. For example, you might notice a subscription you forgot about. If something pops up, fix it by updating the source with the new account's information.
It is therefore advisable to leave the old account open for another one or two months to ensure that no further payments are received from it.
Also consider any account maintenance fees. It may be worth maintaining a minimum balance when closing this account to avoid annoying fees.
Close your old account
After keeping both accounts open for a month or two, you can be confident that no one is expecting payment from your old account. Double-check that there are no outstanding checks or pending payments. At this point, it's probably time to close the old account.
First, transfer the remaining balance from your old account to your new account. Then follow your bank's instructions to close the account. In some cases, you can do this online. In others, however, you may need to write a letter or call.
Unfortunately, many banks make it a little complicated to complete the account closure process. But once you have submitted your request, it is only a matter of time before you close the account for good.
The conclusion
Switching to a new bank can take time and effort, but it can be worth it if you are now with a bank that fits your needs and situation. This way, you can continue to work toward your financial goals.
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