Switching Banks: Everything You Need to Know

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Many people find the process of switching banks a bit daunting. The more banking products and services they use, the harder it seems to break free from their current bank and switch to another. 

It’s also no secret that conventional banks don’t make it that easy for their customers to jump ship. JD Power’s 2019 US Retail Banking Satisfaction Study found that only 4% of consumers switched their primary banks in 2018.

The hurdles that they may have to go through discourage a lot of people from changing their banks. Even if they can get better products or higher interest rates with the other option they choose to remain with their current bank just because they don’t want to go through that process.

The truth is, switching banks isn’t something to be scared about. If you just do your research and follow a few simple steps, you can break the shackles and move on to what will hopefully be a more fulfilling banking experience.

Why would you want to switch banks?

However, certain life events can make it necessary to switch banks. Perhaps you’re moving to another state or you need to restructure your entire savings and investment portfolio. Or you may simply be fed up with the high fees and the bad customer service that your current bank provides. 

Cybersecurity is a very important element to consider. If your bank has poor cybersecurity policies then it would be best not to entrust it with your funds. You’ll be surprised to know that the financial services industry is one of the most targeted.

Is it a bad idea to switch banks?

The banking and financial services industry is one of the most highly competitive. Banks offer a variety of promotions precisely because they want to win over their competitors’ customers. 

A lot of people end up with the perception that switching banks would disrupt their lives. If they have to move a lot of pieces around, they fear that something may fall through the cracks and they could end up missing a crucial payment or maybe even losing money. 

These concerns are often unfounded for the most part. The complexity of your financials is no reason to consider changing your bank to be a bad idea.

Can you transfer between different banks?

It’s simpler than you may think. Once all of the formalities are completed with the new bank and they’ve got you set up, transferring funds between the two takes seconds. 

The best way to go about it is to use a person-to-person mobile payments platform like Zelle which is supported by most major banks in the country. Simply link your new account with the one you’re going to close and then transfer funds between your old and new banks. It’s the simplest and cheapest way of doing this. 

Is switching banks easy?

Switching banks is not as easy as a walk in the park, but it’s not as difficult as some people may think.  There are some formalities to complete before your new bank can bring you on board as a customer, but it’s nothing to worry about.

Banks train their customer service representatives for helping people who are looking to switch. So even if you run into an issue, chances are that the representatives will go out of their way to help you get set up.

A step-by-step guide to switching banks

Shop for the right bank and account

First, figure out what type of bank you want to do business with. You’ll want to look at the services and products that they offer before making a decision. 

Consider a few factors before making a decision. Your new bank should ideally have lower fees, more services, and better customer service compared to its predecessor.

Depending upon what you’re looking to get out of the switch, whether that’s high yield savings or money market accounts, you may then choose the type of bank that will be most suitable. This can be a conventional bank, an online bank, or a credit union.

Change your direct deposit methods

Once you’ve selected a bank and opened an account, make sure to change the payment methods for your direct deposits and recurring payments like subscriptions. This is an important part of the process that shouldn’t be overlooked. 

For example, it would be a problem if your paychecks are still being deposited in your old account or you have payments still linked to an account that no longer has funds.

You may need to request your employer to send payments to the new account. If they need some time to do that, you may have to manually shift funds between the new and old accounts in the meantime. Your employer should be able to let you know how long the process to change your direct deposit method will take.

Don’t forget about the additional income sources that you may also have. This can include systematic payments like dividends and interest earnings, social security benefits, pension, and annuity income.

Transfer automatic payments

There are a few ways that you can do that. The old-fashioned way is to print out a year’s statement of all transactions made from the old account and then manually highlight all of the recurring payments that need to be transferred. 

The process can be much faster for people who use one of the many budgeting apps available. Since they already map out their automatic payments, they know exactly what needs to be linked to the new account.

Once a list has been created of all automatic payments and direct deposits that need to be moved, it’s time to go ahead with it. This isn’t something that should be rushed through. 

Take your time. Make sure that all of the payment information is properly added to the new account. Once those deductions start being made only then you can rest easy because everything will then work as it’s supposed to.

Close your old account

Many people make the mistake of rushing to close their old account as soon as they have opened a new one. That’s not a very wise thing to do. It’s merely not enough to change deposit methods and reconfigure automatic payments. 

You should have absolute certainty that the closure of the old account isn’t going to cause any disruption in your life. So even after moving all deposits and credits to the new account, it would be best to wait for a couple of billing cycles at the very least. 

This will make it very clear if something was missed. Any such payment would stand out on the latest statements of the old account. If it’s all good, you can be sure that nothing fell through the cracks during the entire process and the old account can now be closed.

You obviously wouldn’t want to leave any funds in the old account as well. Don’t forget to transfer any remaining funds. Double-check if any funds were placed in a fixed investment that may need to be divested as well.

Find a bank that serves you and the environment

Switching banks becomes very easy when the bank helps you. Aspiration makes it ridiculously simple to change your bank. Millions of customers choose us over conventional banks due to our zero monthly fees, free access to ATMs everywhere, and up to 100x more interest than major banks.

Most of our customers particularly like our socially conscious and enviro-friendly approach to banking. We pledge to our customers that their deposits won’t be used to fund fossil fuel projects that destroy our planet. 

We offer a cash management account that provides the best of both, a robust checking account and a savings account with an APY of up to 1.00%. That’s significantly higher than what most major conventional banks offer.

Aspiration is uniquely positioned as a banking services provider that not only serves its customers but also helps make the world a better place. To put that into perspective, consider the fact that every $1,000 transferred to Aspiration has the impact of 6,000 fewer miles being driven by the average car.

Open an account with Aspiration and join the green banking revolution by doing your bit to protect the planet through your daily transactions.

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