Why you might want to switch your bank
How often have you changed your cell phone number?
If you鈥檙e like me, the answer is never 鈥� because even if you鈥檝e physically swapped area codes a few times, retaining your original number avoids hassle and confusion. It would be difficult to switch it at this point.
I bet there鈥檚 a good chance you feel the same way about your checking account. Maybe you signed up for it because of geographic convenience, or at least whatever was convenient a decade ago. Convenience isn鈥檛 bad when it comes to banks, but if your lifestyle has changed since then or you鈥檇 like your dollars to go further, you may want to start looking around.
Why you might want to switch
I鈥檝e switched bank accounts twice in the past five years. The first switch was from one large national bank to another, mainly to earn a cash sign-up offer I鈥檇 received in the mail, but also because the new bank was closer to my house at the time.
About a year later, I realized I never visited the branch, was tired of paying ATM fees and wanted to earn higher interest yields on my money, so I switched to an online bank, which I鈥檝e been super happy with.
Here are a few reasons switching might make sense for you:
- For a better lifestyle match:聽Perhaps you鈥檝e moved or are interested in features your current bank doesn鈥檛 offer. Some people value physical proximity to a bank; others, online or mobile access. Some care about ATM access, bill pay, phone support or automated savings; there鈥檚 a world of options out there, so聽.
- To avoid fees:聽If you鈥檙e聽聽with your bank, that鈥檚 a sign something is wrong. You can avoid overdraft fees 鈥� some of the steepest fees banks charge 鈥� by adjusting your budgeting approach and your overdraft preferences. But you can also explore the market. There are many great banking options that have聽.
- To get better returns:聽If you鈥檙e willing to switch to online banks or credit unions, your money could be earning higher returns, even in checking accounts. Some checking accounts are offering annual percentage yields over 0.5%, and聽聽offer more than 1% APY.
- For quick cash:聽A few banks offer聽聽for opening and maintaining a new account, ranging from $50 to $200 for a new checking account. I wouldn鈥檛 switch banks purely for the cash 鈥� because of the effort required and the聽聽鈥� but it can certainly sweeten the deal.
How to make the switch
Switching bank accounts can be tricky and time-consuming. It requires planning to ensure money lands where you need it and is available to pay your bills throughout the transition. To avoid bounced checks, fees or other headaches, take the time to do it right.
- Before you make any move, note every regular transaction that goes in and out of your current account. Go back through at least six months of account statements to make sure you鈥檙e not missing anything, including direct deposits, utility bills, credit card payments, etc.
- Open the new account. This might take a week or two, depending on the bank.
- Fund the new account. Move some cash from your current account to the new one to get started, or change your direct deposit to your new bank account. Then wait until the first paycheck appears in the new account.
- As soon as the direct deposit is lined up with the new account, start moving all of your bills there and update any auto-pays. Don鈥檛 delay. You could face pricey overdraft fees if you don鈥檛 have enough money in your original bank to cover those bills.
- Wait a month or so before closing your old account to ensure you haven鈥檛 missed anything. Then visit the old bank or call a customer service rep to close it out, and they鈥檒l write you a check for any outstanding balance. To play it safe, you might even ask for written confirmation that the account has been closed.
聽can help you more easily manage your money 鈥� and in some cases, it can even earn you more of it. Just make sure to do your homework so that the switch is as painless as possible.
Sean McQuay is a credit and banking expert at NerdWallet. A former strategist with Visa, McQuay now helps consumers use their credit cards and banking products more effectively. If you have a question, shoot him an email at聽asksean@nerdwallet.com. The answer might show up in a future column.
This story originally appeared on .
