The first thing in changing banks is to check out the options. Things to watch out for are, of course, fees. Some banks (mostly local) and credit unions don’t have them, some have requirements to avoid them. If you have enough cash to waste laying around in a barely any interest account, I’ve discovered that you can get “free” checking & debit transactions by simply giving up any opportunity to make your money work for you – though truthfully, I do tend to keep a reasonable amount for emergencies in a savings account, so as long as the required is savings and not huge, this is an option. An easier method is by setting up a direct deposit to checking – most were happy to waive fees if they knew your cash was coming to them week after week, month after month. Finally, you can go in debt – if you can place your mortage at the institution and it is high enough to meet their “must owe us” number, they figure they are getting plenty off you in the interest. Downside of this, as I discovered, if you are responsible and pay down your mortgage, they start to charge fees the second you cross the threshold.
Picked a bank or credit union? Great! Open an account (or two – go ahead and do that savings account now as well). Get your debit cards, checks, deposit slips and routing numbers ready. It’s a fresh start so make a pretty file folder (yeah, paper) to keep it all in.
Next up – what is linked to your current accounts? You’d be surprised. Go back at least a year and look for linkages. Utility bills and such that are monthly are easy – the sneaky ones are those once or twice a year things like insurance. Or things that pay into your accounts – PayPal and such. Start making a list and adding your new account to the setup – it takes a week in some cases for that account to be “approved” for paying and you don’t want to be late on anything. This is a good time to set up autopays if you can – I like to do the autopays from credit card and then pay the cards off each month – that way I get the rewards points (which covered a LOT of Christmas this year, BTW). Keep a close eye on balances as you switch over – your old bank would dearly love to hit you with a charge or fee of some sort.
Direct deposits – change them about a week after your big bills are paid. This will give you a couple of weeks to switch payment accounts and buffer up the new accounts so next month you are using them for everything. Beware that with paychecks this may mean a few caveman weeks of paper checks – this too shall pass.
Safe deposit boxes – close the old, open a new (if you really need one). Why would you need one? Wills, those CDs & DVDs of family pictures you scanned, insurance policies and other similar stuff. Don’t have that stuff? Put it on your list to do first thing.
Checks & deposit books from the old bank – tear off a few and tuck them in the “closed account” banking folder. Shred the rest. Get copies of or scan all your statements.
Debit cards – activate the new bank cards, shred the old bank cards. Don’t keep these a second after you close the account – far too easy to screw up and grab the wrong card.
Bank credit cards – don’t close these. No, really. Closing these out can have a negative effect on your FICO. Be sure you know the impact on your credit score before you nuke these. Also, be careful to charge something to them regularly (I like small monthly charges like a gaming account or somesuch) and pay that off unless your card has a fee for that (yeah, really – I’m not kidding). At some point in the future we are going to shop better cards, but for now, leave these alone. (Don’t forget to link payment to your new bank, though.)
Think you have it all? Then, at the end of the month (preferably in line with your statement period), close those old accounts and move the cash. Double check that all you checks and debits have cleared – you should have put that checkbook and card away a couple of weeks ago, but be sure to ask your spouse/pet/significant other as well.
Congratulations! You have completed your move and have a fresh, new, untainted set of accounts at a carefully selected financial institution!