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Ever wanted to switch financial institutions but didn’t know where to begin? If so, you’re not alone. Many financial experts say the only reason people stick with financial institutions is because the prospect of changing financial institutions is too intimidating.
That’s where this guide comes in. We’ve made the process as easy as possible by answering beginner’s questions on how to switch banks, laying out all the steps in an easy-to-follow order, and even including a free downloadable guide that will make switching banks (and switching from a bank to a credit union) as painless as possible.
While most people stay with a financial institution because the idea of switching bank accounts is too daunting, there are a lot of good reasons to change your financial institution. Here’s when to switch banks:
Your bank is charging fees that other financial institutions don’t
Another financial institution offers better interest rates
You’ve moved and want a financial institution that is closer to your home or work
Another financial institution offers services yours doesn’t
You need a financial institution with a larger network of ATMs
The customer service at your current financial institution is poor
One of the hardest parts of switching financial institutions is figuring out how to find a new bank. You’ll want to research your options thoroughly, otherwise you’ll get through the process only to discover the new financial institution suits you even less than your old one.
One of the biggest reasons people hesitate to switch financial institutions is fear—fear that their paycheck direct deposit won’t get transferred, fear that they’ll forget to set up automatic bill payment for an important expense or even fear that they might make mistakes when switching banks that will lead to a call from a collections company.
Fortunately, you can eliminate a lot of that worry by taking a few simple steps before you switch banks:
You can use a switch kit, like the free downloadable switch kit First Alliance Credit Union has in our resource center, to help with this process.
Now that you’ve selected a new credit union or bank and taken the time to get organized, you’re finally ready to transfer accounts.
How long does switching accounts take? While you can complete the process in a day or two, you’ll want to run your accounts in tandem for a couple months to make sure your automatic bill payments have transferred over to your new account. Once you’re sure your payments and direct deposits are set up properly, you can finally say goodbye to your old bank accounts. Figuring out how to close a bank account isn’t difficult, but you will want to handle the process carefully to make sure you don’t miss anything.
Look at whether your new financial institution offers a bank account switch kit. Some financial institutions provide this resource to help you transfer your money, open your accounts, set-up any automated deposits, and close accounts with your old bank. It’s makes the whole process easier, and it’s worth pointing out that you can download the First Alliance Credit Union switch kit for free at our resource center.
You don’t have to close your old account. While you should keep your old bank account open for at least a month to make sure all your direct deposits and automatic bill payments are running smoothly, you don’t have to close it if you don’t want to. Many people wonder how many bank accounts they should have, and the answer is “as many as you need.” If your old bank account has a benefit your new one doesn’t, you should keep it open—just make sure you don’t have to pay any unnecessary fees to keep your old account active.
Prioritize your transactions. If you have bills that are coming up while you're switching, it may be easiest to switch those after they debit from your existing account. You can use this as an opportunity to make sure your accounts are all correctly set up at your new credit union or bank. Use the list you created to get organized in the first step to prioritize which accounts are being transferred and when.
Switching financial institutions won’t affect your credit score. One of the biggest questions people have when switching credit unions is “Does switching bank accounts affect my credit score?” and the answer is “No.” The only reason your credit score might decrease while switching financial institutions is if you overlook a bill that goes into collections, and you can easily avoid that by planning ahead and keeping both old and new accounts running concurrently.
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