How to Prepare Your Finances Before Switching Banks

Often you will move into a different state or city, where your present bank is no longer as prevalent. In these cases, you will evaluate the two or three banks that are seen most prominently in your area, and decide which one suits your needs best.

It may be a greater variety of online banking options, or more ATMs near your home/work that sway your decision. Either way, you will have chosen to open a new bank account and switch over from your existing institution. That is just the start, because there are several steps you must go through before all your finances are sorted. Here is a checklist of how to prepare your finances before switching banks.

1. Open a New Account

The first thing you should do is decide where you want to bank. After you have chosen a bank, visit the nearest branch, or go online, and open a new account. Make an initial deposit of 50 or 100 dollars, which will set up your account and allow you to receive checkbooks and a debit card. You can make a further deposit on the spot, or later on, depending on how quickly you want to move all of your money.

2. Identify Expenses

Most of your bills are likely to be paid automatically each month, through your bank account or your debit card number. If this is the case, you should make a list of all your monthly expenses. Start off with any mortgage/rent payments, and ensure that you are using checkbooks from the NEW account. The last thing you want is to send a cheque for your rent from your old account, only to have the cheque bounce. Move on to monthly electric, gas and other utility bills. Make sure each of these accounts reflects your change in bank.

3. Redirect Income

If you are getting a direct deposit from your employer every two/four weeks, make sure you let them know that you have changed banks. Most employers can make this change immediately, while others may need a couple of weeks to reflect the change. If that is the case, they may pay you with a money order for a couple of pay periods.

4. Expect Errors

Not everything will be transferred smoothly. You may forget one of the monthly bills that you have to pay, or your employer might make a mistake with the direct deposit. In either case, do not close your old account immediately. Keep it open for as long as possible, and keep a few hundred dollars in it for emergency situations. That way, if a bill accidentally gets paid with your old account, you will still have the necessary funds for those transactions to go through.

5. Close the Old Account

After a couple of months have passed and you have seamlessly integrated all of your income/expenses to the new account, you can shut down the other one. Ensure that the old account has a 0 balance, and that you have no outstanding debts with that bank.