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How to Switch Banks Painlessly

How to Switch Banks Painlessly

You can choose an online bank or an offline bank, though these days most offline banks with branch locations also have an online option. This has expanded the reach of most traditional banks, whilst allowing smaller firms to start up and gain custom from around the country. There are now more banking choices than ever, so there is no need to stick with a bank you do not like or that mistreats you. The bigger banks are always going to have the edge over smaller firms, but at least these days you have more of a choice than you ever had before.

Choosing A New Bank And A New Account

Choosing a bank shouldn’t be done on a comparison site. Such sites are often manufactured in a way that promotes the companies that pay the highest referral rates. Furthermore, many companies manipulate comparison sites to appear to be the best deal when they are not.

Research Into Which Bank Suits You

Consider your needs before looking at offers. Do you really need a good saving rate when you rarely have money left over from your wages? Do you really need an account to build your credit rating if you have no reason for credit? Is the availability of free ATMs really going to be a problem when you make most of your purchases online? Are there branches near you that you can visit? Or, are you looking for the bank with the lowest fees?

Opening Your Account

Most banks will allow you to open your account online. You will have to use a secure computer in relative privacy because you will have to enter a lot of personal information and come up with your passwords.

They are also going to want things such as proof of your address via statements or utility bills. Luckily, many energy and water companies have e-statements you can forward, and if you have an account with another bank, then they too may offer e-statements that you can forward on to your new bank to prove your address. Otherwise, you may have to post a copy to the company before your account is fully opened.

You may also visit a branch and open your account with an advisor. This usually means you can have your account opened right away, but you will still have to wait for things such as your ATM card and check book.

What Is Taking So Long?

Banks will brag that you can open your new account in 15 minutes, but it may take as long as two weeks before your bank account is opened, and sometimes it takes even longer than that. They have to verify your information and run your details through fraud checking filters (like doing a ChexSystems check). It can be a long process in some cases, plus they often have to post out contracts that you have to sign. There are also times when your ATM card and check book take around two weeks to arrive.

Funding Your Account

If you already have a bank account, then funding your account for things such as your first opening deposit is very easy. If you do not have a bank account, then you may be able to have somebody write you a check, or may be able to pay money into an ATM. There are usually ways in which you can get money into your account for your opening deposit and/or your account-opening fee.

Funding your account over time is something you have to work out for yourself. Most people fund their account by having their work pay them by check or direct deposit into their account. You may also transfer money into your account via other accounts such as PayPal or Skrill accounts.

Bank Account Fees for a New Account

Banks need to make money too — if not directly from monthly fees, then from a raft of in-direct ways. Many of best bank accounts, will charge you monthly fees or other fees.

Some bank accounts do offer free checking accounts. Read our list of the best free checking accounts

Here are some of the more common bank account fees you may face opening your new account:

Opening Fees

There are some banks that will charge you a fee to open your account. This is something you need to check prior to opening your account. There are also banks that ask for a minimum opening deposit, but this is not a fee, it is money you have to put into your account but that is still your money when the account is open.

Funding Fees

There are some accounts that will charge you money for putting money into your account. There are numerous ways of getting money into your account, which means there are numerous ways a bank can charge you fees. If you are having your employer pay your wages into your account, then check to ensure the account you open doesn’t charge fees for the method your wages are paid.

Minimum Balance Fees

There are some banks that will charge you a certain amount of money if you do not maintain a minimum balance on your account. If you are the sort of person that doesn’t leave money in your account from one month to the next, then it is imperative that you avoid accounts that have minimum balance fees.

Bank Maintenance Fees

A maintenance fee is a charge you pay annually, monthly, or for every statement cycle. There are many accounts that charge fees for simply having them, but they usually come with some sort of perk. If you are looking to open a checking/current account for things such as everyday purchases and to be paid into, then avoid accounts with maintenance fees. If you do have a special purpose for your account and there is a perk to the account you choose, then consider paying a reasonable maintenance fee.

Beware of hidden maintenance fees. The small print on account offers is there for you to read. It is small, boring and confusing, but may point out the hidden fees the bank has. For example, there are some accounts that will charge you money if your account is inactive for six or twelve months.

How to Switch From Your Old Bank to a New Bank: The Steps To Take

Here’s the 4 main things you need to do to smoothly transfer your account from an old bank to a new bank.

1. Switch Your Direct Deposits And Direct Debits

Doing this can be tough. You have to inform the people/companies that you are paying, you have to inform your old bank, and you have to set up the direct deposit or direct debit with your new bank. Take your time, document as much as you can on your computer, and keep track of your own progress. The last thing you want is to be paying the same bill with two accounts or to have people trying to pay into your old account when you have closed it. Changing your direct debits/deposits and starting to use the transfer and checking system provided by your new bank is all part of the process of turning your new account into your primary one.

2. Update Your Linked Accounts

One hopes that you have kept track of all the accounts that are linked to your old account because you are going to have to change them all to your new bank. The easy ones to remember include services such as PayPal, however, there are numerous online accounts that take your bank details but that do not regularly pay or draw from your account–which makes them easier to forget. These types of online accounts range from website auction sites to porn sites.

3. Do Not Close Your Old Account Right Away

There is no harm in keeping your old account for a little while if it is not charging you a maintenance fee. You can keep it open for a few months so you can check to see if there are any accounts that are trying to draw from it or pay into it. These may be the online accounts that you have missed whilst trying to change your online accounts over. In addition, you should wait for checks to clear and other payments to finish paying in before you close your account. If you want to close your bank account right away because another company is illegally drawing money from it, then seek legal advice for ways you can force the bank to stop payments.

4. Empty Your Safe Deposit Box At Your Old Bank

If you have one, then clear it out before closing your accounts. They may still charge you for the time you have paid upfront, and they are unlikely to refund you your money, so you may like to consider keeping and using the box until the term expires. Just remember that you have the box so you can clear it out before its expiration.

Possible Bank-Switching Problems

Is there a chance that changing your bank will affect your credit rating? It may affect your credit rating as a whole, but is more likely to affect your personal rating with the banks in question. The new bank may not be willing to give you much credit at first until you have built a history with them. Your old bank will also be willing to forget your history with them once you quit and close down your accounts.

You have to be careful when it comes to your automatic payments. If there is a chance that people are going to try to draw money out of your old account, then this could have negative repercussions–including a negative effect on your credit rating. For example, many people forget that their antivirus software is on auto-renew and that it draws money from their old account to do it.

It can be difficult changing and altering all of your linked accounts. There are some companies with terrible administration departments where they do not action the change, or where they make you wait a long time to switch your linked accounts. This is not the fault of your bank, this is the fault of the companies and accounts you linked with your old bank account.

Moving accounts may also result in higher interest rates because of the ding on your credit rating. It may be worth checking out the interest rates before you decide to switch. If you can negotiate a special deal that goes along with your switch, then this may help lessen the damage.

What About Switch Kits?

Need a Bank Account but have ChexSystems problems or Bad Credit?


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These are things that some banks offer to help the switch and the transition. Usually it is in the form of advice, and may include fill-in-the-blank letters and messages that you send to companies to tell them to switch your bank accounts over. They are not that good, and are certainly not worth paying for, but may add a level of convenience to the proceedings if used correctly.

About The Author

Ben Todd

Ben was a seriously broke graduate student with bad credit who after finding himself rejected for any sort of credit card or loan for most of his adult life, finally decided to get his financial life in order. ‘

He spent several years reading as many financial advice books and blogs as he could.

And suprisingly, Ben found he actually LIKED the topic of personal finance; after fixing his own finances, starting his own successful work at home website business, and using his earnings to get out of debt, created echeck.org to help others do likewise!

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