8 Steps To Insure a Seamless Switch From Old Bank To New

Changing banks can be a huge hassle but there comes a time in every persons life when their original bank just doesn’t satisfy his or her needs.

Here are some guidelines to follow when changing banks to make sure the process is as smooth as possible.

None of these things require any cash to be moved just yet, and should all be done before you actually change the way your money flows in and out of your life to insure you don’t overdraft or lose track of things in the process.

My loving wife adds that the first thing you should do when you think the time has come to change banks is discuss the change with your wife. When dealing with finance as a couple, be sure to make these kind of decisions together.

1. First things first, you need to actually choose a new bank and open an account. Here is my guide to walk you through the process of evaluating your needs and choosing the bank that fits you the best. After making the choice, open a new account and get your online banking set up.

2. Once your new bank is set up, you need to get checks, deposit slips and debit cards ordered. Even if you don’t plan to ever use checks, some things like direct deposit still require a voided check to be on file to create the connection between employer and bank.

3. Check with your employer to see how quickly direct deposit can be changed over. In many cases the process can take between two weeks and a month to get finalized and have your paychecks deposited into your new bank. Don’t initiate the direct deposit change just yet but knowing how long it takes is essential to a smooth change.

4. Set up electronic connections between your new bank, and all of your old banks. This can take 2-3 days on average and is really important to have set up before you make any changes to your financial system.

5. Look over your bills and all outgoing cash. Evaluate when the best date would be to move your money from one bank to another. If you don’t do this and happen to change your direct deposit, or move the money from your old bank to your new bank too late or too early in the month, there is a high chance you could interrupt your cash flow. You don’t want to risk bills coming due when your money is pending somewhere, stuck in limbo.

Normally, your bank account balance will ebb and flow during the month. You should switch at a high point so you aren’t spreading the little cash you have at a down point between two banks.

6. Aside from the bills you pay manually, double check your old account for automatic withdrawals for things like club memberships or insurance premiums. Insurance companies in particular will usually give you a discount if you are set up with an ACH withdrawal directly from your checking account to pay for your insurance, but if you forget to move this to your new bank, you could be hit with overdraft fees.  Tip:Try sorting transactions by ACH Debit in your old account and see what shows up.

7. Get your previous Payees added to your new bank. This doesn’t take too much time, but getting your BillPay system in line before you even move any money to your new bank will help speed up the process of getting used to how your new system works.Tip: Once you have completed step 8, send trial payments to each of your Payees to insure the money gets to the right place, something like $5. This can also help you gauge how fast your new bank’s BillPay works.

8. Once all of the above it taken care of, you are ready to start actually making the switch. Get your direct deposit switched to the new account. As soon as that is finished, and if you followed all the steps above, you should be able to seamlessly move any money you have left in your old account to the new account and start operating completely from there.

Remember that when switching banks, you are essentially completely replacing the cornerstone of your financial life. Any hitches with the move can throw your finances into disarray and cause serious stress. By following the guidelines here, you can reduce that stress and shift from one bank to the other without major issue.

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8 People have left comments on this post

» KNS_FinancialNo Gravatar said: { Sep 3, 2010 - 11:09:58 }

Your wife is right (but aren't they always?)! Checking about direct deposit is something that I see overlooked all the time. It's like people expect the banks and their employer to just handle everything for them!
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Jesse MichelsenNo Gravatar Reply:

I won't give too much away, but I actually messed up pretty bad in a recent bank move, which is what prompted this article…though I did check on my direct deposit because I've messed up there in the past 🙂

» Gwen SnyderNo Gravatar said: { Sep 20, 2010 - 05:09:07 }

"4. Set up electronic connections between your new bank, and all of your old banks. This can take 2-3 days on average and is really important to have set up before you make any changes to your financial system."

What does that mean?

Jesse MichelsenNo Gravatar Reply:

Hi Gwen,

An electronic connection, also sometimes called an ACH connection between you bank accounts links accounts electronically so you can move money back and forth between them.

To set up an ACH connection, look in your online bank account for something like Manage Accounts, Link Accounts, or Set Up Transfer Accounts. You will need the routing number and account number of your bank to set up the connection.

Thanks for asking, and I hope this helps!

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