How To Switch Banks: A Step-by-Step Guide

How To Switch Banks

Switching from your current bank is not a difficult process, however, there are steps to follow to make it easier and to avoid any missteps along the way.

1.) Research Your Options 

Not every bank is a good fit for every individual. Before choosing a bank or credit union, it’s important to determine what’s important to you in a financial institution and assess your personal finance needs. 

• Decide on features important to you: Banks offer different features, so pick one that offers what you value.
  • Local bank: Do you need frequent access to cash? Is face-to-face customer service important to you? Then a local brick-and-mortar bank or credit union will likely be the best option.
  • Online bank: Are you after the highest interest rates on your savings deposits? Do you want to ensure your fees are as low as possible? Then an online bank (or one with good technological capabilities) may be a good choice. 
• Check opinions and reviews: Ask family members or friends for their opinions and check reviews to make sure it fits your requirements.
• Check the fiscal stability and reputation of the institution: Five banks failed in 2023, so it’s important to check the health of any potential financial institution. Third-party rating services such as Bauer Financial, Moody’s, Standard & Poor’s and Fitch each use different criteria to assess the health of banks and credit unions. 
• Make sure your funds are insured: Choose a bank that is a member of the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA) to ensure your deposits are insured by the government if the bank fails. 

>> Related: Learn more about the largest banks in the U.S.

2.) Open a New Account

Once you’ve selected the bank and account type you want, gather the necessary documents needed to open a new account, including:

• Photo identification (usually a driver’s license or passport)
• Proof of address (often a utility or credit card bill)
• Social Security number
• Direct deposit information from your employer

If you’re opening a specialized account — such as a student checking account — you may need additional documentation.

Switch Kits

Many banks have a switch kit to facilitate moving all your information to your new bank. Check with your new bank to see if they offer a switch kit, which acts as a helpful checklist to ensure you have all the necessary information and have taken all the steps for a smooth transfer.

Once you have signed all the paperwork for your new account, make sure you have all the tools you need, such as:

• A debit card or ATM card 
• Checks 
• Account information (such as routing and account numbers) 
• The bank’s mobile app

You can fund your new account with cash (if you’re opening the account in person), a check from your old bank account or an ACH transfer if your bank allows it. Some banks allow you to fund an initial deposit with a credit card as well.

>> Related: Learn more about how to open a business banking account

3.) Update Direct Deposits and Automatic Payments 

Updating your automatic transactions — direct deposits, bill payments, subscriptions and recurring transfers — to your new account is arguably the most cumbersome part of switching banks.

• Check bank statements: Look through the past 12 months of bank statements to see what automatic bill payments you need to update. This ensures you find any annual recurring payments such as insurance or tax payments. 
• Update your automatic payments: Sign in to each website or app for each bill and change the account and routing numbers. If you have bill payments set up through your bank account, you’ll need to switch these, too.
• Update direct deposit with your employer: If you receive your paycheck via direct deposit, update your new account information so you do not miss any automatic deposits.
• Notify relevant parties of the bank change: This likely includes your employer, insurance providers, mortgage company and the IRS (if you receive your return via direct deposit).

>> Related: Learn more about apps to manage subscriptions to help you find any automatic payments you have

4.) Close Your Old Account 

The last step is to close the account(s) at your old bank. It’s a good idea to leave the account open for a month or two with a small balance to cover any checks or payments you’ve made but haven’t accounted for. Ensure you are above any minimum balance requirement so you don’t incur a fee. If you close your account too early, you may have bills that go unpaid or rack up overdraft fees.

Once all payments have cleared, you can request that the old bank mail the remaining funds to you by check or transfer them to your new account via ACH. 

>> Related: Learn more about how to close a bank account

Tips for a Smooth Bank Switch

While checking and savings accounts might appear similar, customer experiences with banks can vary. Here are a few tips for ensuring a seamless transfer to your new bank.

• Link your checking and savings accounts: If you make automatic savings deposits, set those up after at least one paycheck has been directly deposited correctly so you don’t overdraw your checking account.
• Memorize your new PIN: Add your account password and username to your online password manager.
• Learn how to use the bank’s online portal and app: Know what actions you can take online and which (if any) you must do in person.
• Locate your bank’s customer service phone number: Know this number in case you run into any snags.
• Set up two-factor authentication: This is often a code sent via text or email that you have to confirm when signing in. It could also be your fingerprint or a code from an authentication app.
• Check out any bank perks: Take full advantage of any perks, such as cashback or a sign-up bonus.
• Choose a beneficiary: In the event of your death, the bank will know whom to transfer the funds to.
• Update information: Add your new bank account information to your credit card, utility provider or other companies you pay regularly.
• Utilize budgeting tools: Investigate these tools in the bank’s app or online portal to track and categorize your spending or monitor your progress toward a financial goal.
• Check your credit score: An increasing number of banks allow you to monitor your credit score for free and give you suggestions for increasing it.

>> Related: Learn more about the best bank bonuses

The Bottom Line: Switching Banks

Switching banks can provide you with a wide range of benefits that better fit your financial needs. Consider your banking preferences and needs while researching banking institutions. Once you’ve chosen the right bank for you, follow the steps in our guide to ensure a smooth transition. 

FAQ: How To Switch Banks

Is it hard to switch banks?

Not usually. The process is usually as simple as opening a new account and closing out the old one. You may be able to deposit funds directly via ACH, but even if your new bank doesn’t allow that, you can use a check or cash.

How long does it take to switch banks?

Opening a new account usually takes less than an hour, and you can usually start making payments from it as soon as you put money in. However, keeping your old bank account open long enough to cover any pending payments is wise.

Can I switch banks online, or do I need to visit a branch?

Most banks and credit unions allow you to open accounts online, so there’s no need to visit a branch. However, if you plan to close an account, the bank often requires you to call or visit a branch. If you’re closing a joint account, the bank may require all account holders to come in to sign documents. 

 

Will switching banks affect my credit score?

No. Since your checking and savings accounts aren’t considered debts, they don’t appear on your credit report or affect your credit score. Most banks use ChexSystems, which is a banking reporting agency (not a credit bureau), to make certain you haven’t closed a bank account with a negative balance, bounced numerous checks or used an account fraudulently.