Switching Financial Institutions Does Not Have to Be Difficult

Published: March 13, 2019

You may be at the point where you're considering switching financial institutions, but the thought of it makes you apprehensive. What happens if you forget something? Will your bills get paid? What if you mix up a number? Those are all common questions that everyone has before they finally make the decision to switch. Before you decide to just stick it through with a financial institution you're unhappy with, know that switching isn't that bad. Here's how to make the switch as efficiently as possible.

1. Choose your new financial institution

Before you close your account, make sure you do the research on other financial institutions. Figure out what exactly it is that you're unhappy about with your current financial institution, what you're looking for in products and services, and make your decision from there. Once you decide, you can take the first step in switching everything over.

2. Open an account

Once you choose the financial institution you want to become a member of, you'll open an account. Most institutions allow you to apply to open an account online, which makes it easier if you don't have time to head to a branch. You may need to pop in at some point to verify your identity, but you can do most of the application and signatures online now.

3. Make your payroll change

After your account is opened, you'll be given paperwork that contains the institution's routing number and your account number. Begin the process of changing your direct deposit from the account of the financial institution you're looking to leave to your new account. Make sure that you monitor your new account to ensure that your payroll is depositing into that account before you close your other account.

4. Make a list of all automatic payments/deposits

After you switch your payroll information, you'll start seeing your paychecks depositing into your new account. This will provide you with the money you need to begin switching over your bills and other automatic payments and deposits. The best thing to do is make a list of all of your bills that are set up on automatic payments. These include: oil, electricity, cable, cell phone, rent/mortgage, car insurance, credit cards, loans, etc. Make sure that you include the day that the payment is processed so you know when to check to ensure the payments cleared.

5. Update all of your automatic payments/deposits

Once you have your list made up, you can start making the switch for your automatic payments and debits. Make sure to check your new account on the dates on when the transaction(s) process. After the first round of payments is processed, you should be all set to close your account.

6. Close your account

When all of your automatic payments and deposits are effectively transacting through your new account, you can officially close your old account. This ensures that your account won't reopen because of a missed transaction. By then, you'll catch anything you may have missed when making your list and can change before you close your account. You'll close your account and can deposit the money into your new account quickly and efficiently. 

Please be aware that some financial institutions will reopen an account that's closed if a transaction occurs after you close it. This could be an automatic payment, deposit, etc. Make sure that everything is processed before you close your account, or you may end up with an overdraft on the account you thought you closed.

Some financial institutions even offer what they call a "switch kit" where it has all of the documents and resources you need to guide you through the transition from your previous financial institution to your new one. It's really simple and easy. Once you make the switch, you'll be glad you did.