If you’re fed up with high bank fees and bad customer service, you may be investigating other banking choices. Online banks, credit unions, and small, regional banks are three of the most popular substitutes for large, national financial institutions.
Choosing a new financial institution is a smart idea in the long term, but the first decision may be daunting and scary. Many people are concerned that they are giving up the security and convenience of a major bank in exchange for a smaller one.
Closing a bank account and transferring huge sums of money is a tedious and time-consuming process. All of this is compounded by the risk that you’ll miss a crucial payment or check while making the changeover, and you’ve got some serious deterrents.
There are a variety of ways to transfer money, but which one is the safest and most secure for you and your financial future? Absolutely! Take the necessary measures to choose a bank that matches your needs, and don’t allow fear to hold you back.
How to Change Bank Account
- Stop any transactions with your current bank.
This implies that you should no longer use the account as your major source of cash and payments. Here’s how it’s done:
- Spending cash. Take out enough cash to last you a few days, plus the $50 to $100 you’ll need to start a new account.
- The bare minimum. Keep an eye out for any fines that may be imposed if you go below a specific minimum amount, and try to keep above it.
- Make use of cash. Stop writing checks, stop using your debit card, and cancel any automated payments from your account.
- Maintain vigilance over your account. Check your account to ensure that all payments have been received (this should only take about three days).
Direct deposit and other payment methods should be linked to your bank account for the time being.
- Look for a New Bank or Credit Union
Before you close your current account, do this in order to ensure a seamless transfer of funds. In other words, don’t lash out at your Big Bank because of terrible customer service and then wonder what to do with the wad of cash you’ve just pulled out of your wallet. The huge bank didn’t even provide you an envelope when you withdraw money.
Determine what aspects are most essential to you before choosing a bank. Smaller banks typically don’t have as many branches or ATMs as larger banks, so you may have to give up conveniences like 10 reward credit cards or a branch on every corner. Online banks and credit unions also provide a number of advantages, including:
- Fee reductions
- Increased interest rates (for savings)
- Lower interest rates on loans
- Convenient, no-fee ATM network with as many locations as a large bank.
The Federal Deposit Insurance Corporation (FDIC) insures every bank, no matter how small or large it may be. Federally-insured banks and credit unions alike have access to the same level of NCUA insurance coverage (National Credit Union Association).
This maneuver can also be advantageous. You may be eligible for a cash incentive if you establish a new account with one of these banks. HSBC and Chase are two of our favorite financial institutions.
- Discover What the New Bank Requires.
Check out the account criteria and deposit preferences of every new bank or credit union you find. There are two things you must know before you begin your career in the music industry:
- Depositing Money. This is especially true for online banks, which may allow you to transfer funds by Paypal, a check, a wire transfer, or straight from your current bank account.
- Monthly fees and minimum balances These are things you should be aware of right away. You don’t want any unexpected charges after all of this hard work!
- Open Your New Account
Starting the process of creating an account is easier now that you know what kind of deposits your new bank prefers. Make a cash deposit to keep your old account open until the new one is set up, either by transferring the funds or making a cash deposit.
- Configure Automatic Payments and Direct Deposit
It will be a great weight lifted off your shoulders once this is taken care of. Don’t forget to cross all of your i’s and dot all of your t’s in this step.
- Deposit through direct deposit. To modify your direct deposit information, your employer should provide you with a simple form to complete. This is normally possible by the next pay cycle, but make sure to inquire about the processing time.
- Payments are made automatically. Things can get a bit complicated here. Make a list of all the payments that are deducted from your account automatically. Then find out which ones were set up through the firm you’re paying and which were put up using your former bank’s Bill Pay system. Set up the appropriate online payments through your new bank, and update the account details for payments that are automatically deducted by firms.
- Paypal. Finally, update your financial details in any online payment systems you have set up.
- Close Your Previous Account
It’s time to check your old bank account one more time to make sure everything has cleared. Make a trip to the bank and terminate your account if you have no outstanding debts or credits.
Check with the bank to see what types of ID you need to bring. You’re leaving your bank for a variety of reasons, and one of them is that there may be a cost associated with closing your account.
- Be Wary of Enticing Offers
Your previous bank is likely to make one more push to keep you on board. Don’t waver from your position! All of your accounts and recurring payments have already been migrated. It’s impossible for your bank to offer you a better bargain than the one you’ve already found!
Concerns About Your Credit Score
Concerns about canceling your bank account may cause you to reconsider. Then don’t! Like a credit card, it isn’t like this. If you apply for overdraft checking, your credit score will take a penalty from all this money-moving activity.
However, if your new bank does a credit check, your credit score may drop by 5 points for the first six months. As a result, opening five overdraft-checking accounts in the same week is not recommended.
Credit bureaus do not receive or store information on your bank accounts, thus maintaining an account for a long time does not affect your credit score.
Don’t be afraid to switch banks if you’re not happy with the service you’re receiving. Your personal funds rank high on the importance, privacy, and sensitivity scale. Choosing a bank that you’re comfortable with is critical to your financial well-being.
The choice to switch banking institutions has been taken. Do you know why you made the decision? Was it an easy or a difficult process? Let us know what you’ve learned in the comments section below!