If you're thinking about leaving the bank where you have your checking or savings account — perhaps because it's no longer convenient or it isn't meeting your needs — there's plenty to think about before you switch to another institution. Here's how to understand your options, get a better deal, and perhaps avoid stress.
Should You Stay or Go?
Figure out what you want most from a bank, then compare the costs of doing business at different institutions. However, don't let short-term promotional offers drive your decision. For tips on how to find the type of account that best fits your needs, see What's the Right Account for Your Everyday Banking Needs?
Discuss matters with your bank. For example, if you're considering closing an account because the institution is charging a new fee, ask if you can avoid that cost by, for example, signing up for direct deposit. "And if you notice a better offer or rate from a competitor, ask if your institution can match it," said Bobbie Gray, an FDIC supervisory community affairs specialist.
If You Decide to Change
Perhaps you found that the benefits of changing accounts are worth more than any costs involved. Here are steps that may help ensure a smooth move.
- Arrange for future direct deposits to go to your account at the new bank. The process may take several weeks so plan ahead. Similarly, if you automatically transferred money from checking to savings at your old bank, start making those transfers at your new bank as well. This also might be a good time to increase your savings commitment.
- Consider starting small. Many advisers suggest that you open your new checking account at or slightly above the minimum balance to avoid fees if you do not expect to begin using it right away. Keep enough money in your old account long enough to pay remaining bills.
- Decide if you want to write checks and, if so, where to buy them. Many people choose to conduct transactions using a debit card instead of writing checks. But if you do want to order checks, remember that you are not required to purchase them from your bank. You may be able to find a better deal from a check printing company other than the one suggested by your bank.
- Have any bills that are automatically paid out of your old account transferred to your new account. If you authorized a utility or another company to directly withdraw money from your checking account, you may need to go back to that merchant to make the necessary changes. If instead you're using your bank’s online bill-pay feature to automatically handle these incoming bills, cancel at your old bank’s website and enroll at the new bank's site, a process that can take a few days to finalize.
- Guard against overdrafts or late fees during your transition period. Carefully monitor each account at your old bank that is connected to direct deposits or automatic bill payments in case you need to pay a bill another way, such as in person or by check, to avoid being charged a fee.
- Make sure that all withdrawals have been posted to your old checking account before you close it. Prematurely closing the account before all checks, debit card payments, ATM withdrawals or other transactions have been paid from the account could trigger fees or other problems.
- Carefully shred and securely dispose of all your old checks and debit/ATM cards after your account is closed. "Don't assume that just because your account is closed that checks or debit cards associated with the old account cannot be used by a thief and cause hassles for you," said Luke W. Reynolds, acting associate director of the FDIC’s Division of Depositor and Consumer Protection.
If you are closing a credit card account, pay attention to the tips above, particularly ensuring that automatic payments or pending purchases will be handled without incident.
For additional guidance on how to avoid hassles or unnecessary fees, speak with customer service representatives at your old and new bank.
Adapted from "Thinking About Changing Banks? Consider Your Options," an FDIC publication.