Closing your current bank account and opening a new one is like a dance—all you have to do is learn the steps. These proactive moves could help you avoid unnecessary charges and other unpleasant surprises that could get in the way of your smooth transition.
There could be advantages to switching to a new bank— maybe the new bank does not charge fees for ATM usage, offers a higher interest rate, or does not penalize you for low balances or for overdrafting. These small charges could add up to a big chunk of change over time!
Before you make the jump, you might consider the following:
Finding a New Bank
Work backwards. You might want to find a new bank before you take any steps to close your existing account.
This leaves you some wiggle room in the event that you have to write a check (yep, you remember checks), or need to perform an electronic transaction, like paying a bill.
Avoiding interrupting the flow
Most of us pay all of our bills online now, but if your creditors don’t know where to find you, it could mean late charges. Interruptions like these could affect your credit rating. A few proactive steps could make the difference—find out which automated accounts need to be redirected to your new bank.
This could include anything from rent payments and credit card bills to your streaming service, gym membership, life insurance premiums, and online magazine subscriptions. Your automatic savings and investment plans could be affected as well—make sure you attach those regular withdrawals to your new account.
Asking your old bank about any transfer or closed-account fees.
You may want to ask your old bank if you need to make your account closing official with a letter or email. Find out if there are penalties charged for closing accounts, or transfer limits.
Putting closure on it.
Don’t forget about any pending transactions that may be taking place during the course of your transition. If you are making the move at the end of the month, for instance, you might want to make sure all of those monthly payments and obligations are paid.
Contacting your employer
If you are enrolled in a direct deposit program at work, your HR or payroll department will need to know your new bank account information and when the change takes place. This can help eliminate any trip-ups on payday.
Of course, this goes for any other direct deposits you currently have going on. For instance, dividends and other investments, or, if you own property, tenant rent payments, etc.
Getting it in writing.
You might want to ask your bank to provide a written letter that officially states that your account is closed. Consider calling customer service to get this done, or, if possible, you could walk into the closest bank branch and request the letter in person.
You might ask how they will return any remaining funds that could be due to you—perhaps it will arrive in the form of a check or deposited directly into your new account.
Receiving a written letter stating that your old account is closed may help you to avoid future charges or accidental reactivation.
Cutting up your checks and debit card.
Erase them from existence so you can reduce the likelihood of your account being used illegally. Besides, shredding is fun.
Don’t lose the confirmation letter the bank sends to you upon closing your account—you may need it to prove that you’ve moved on.
You’ve got to keep them separated.
Sure, it’s best to simplify, but sometimes it can make more sense to maintain separate accounts, to keep your funds from co-mingling. For instance, if you’re a freelancer, independent contractor, or entrepreneur, it may be good to keep your business and personal financial activities separate, for tax purposes.
If you’re saving for something special, like a trip or a new laptop, a separate account may help you achieve that goal faster, as you can see the dollars accumulate toward your goal.
Seeing the number grow might help keep you motivated! Long-term goals, like retirement or college expenses, may also benefit from separate accounts. Emergency savings may also be better placed in a separate account, so you’re not as likely to use it for impulsive splurging.
Opening a joint account?
A joint account is when more than one person has ownership over the account—it’s often understood as an account shared by a married couple, but it doesn’t have to be.
There are joint account types that can also work for business partners, adult children with aging parents, siblings, or anyone else with whom you have a relationship involving money.
A joint account helps ease the financial flow among the account holders, while keeping the account’s activities transparent for everyone involved.
Moving an account like this to a new bank, of course, takes a unanimous vote—everyone needs to be on board before you can close the current account.
If you’re the one doing the convincing that it would make sense to seek a new bank, it may take a list of the advantages, including a higher interest rate, less (or no) banking fees, and other benefits that can help make the move worthwhile for all the joint account holders.
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Change can be good, especially if it helps you grow
Closing an old bank account and opening a new one doesn’t have to be a harrowing experience. When looking for a new bank, make sure that the grass really is greener on the other side—check out the new bank’s minimum balance requirements, fees, and withdrawal/transfer limits.
You can keep this list handy when new-bank shopping, making sure each category meets your personal requirements:
• Fees. That’s your money the bank will be using, and fees could add up quickly. You may want to consider opening an account that is fee-free. This could be at a bank or at another financial institution.
• Interest rates. This is the money the bank pays you to keep your money with them. How is that rate doing for you? These rates can get competitive among banks, so consider some careful rate shopping.
• Location. This could mean a brick-and-mortar location in your neighborhood, but it could also be the ability to handle all of your financial transactions simply from your phone. You may also consider the number of ATMs you will have access to, and whether or not they are fee-free.
• Digital capabilities. Your phone has already become one of your best friends—you could allow your bank to have your back too, with push alerts when your funds are low, and reminders when bills are due. Check out the bank’s ratings and reviews when it comes to its digital capabilities.
• Investment options. You may want to consider a bank that gives you more than merely checkings and savings. How about some long-term investment options, like college or retirement savings?
• Fine print. Don’t simply rely on a bank’s happy marketing messages. Be aware of the finer details, like terms and conditions, expiration dates for introductory annual percentage rates (APRs), maintenance fees, and out-of-network ATM charges. In other words, what is this bank going to cost you, and how? Also, find out if the bank is FDIC-insured.
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A SoFi Checking and Savings account where you can spend, save, and earn all in one product. Plus, you’ll get access to any ATMs worldwide that accept Mastercard® and we’ll reimburse you for the fees.
Plus, SoFi Checking and Savings charges no account fees. That means no account minimum fees, no overdraft fees, ATM, or foreign transaction fees. That being said, our fee structure is subject to change at any time.
You can open a SoFi Checking and Savings account in as little as 60 seconds, all online. You can use your phone to deposit checks, and you can send money to anyone directly from the app (they’ll get it right away if they have SoFi Checking and Savings). On top of that, your funds are FDIC insured up to $1.5 million.
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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet..
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