Choosing to switch banks can be a difficult decision. Many Americans are devout loyalists when it comes to their checking accounts, even when those checking accounts charge hundreds of dollars in fees each year pay almost nothing in interest.
In fact, just finding a fee-free place to stash your money could save you a whopping $750 a year . Fortunately, you do have choices for better checking and savings.
Because of the many options that are available to consumers, now is a great time to transfer funds from one bank to another and ditch the fees once and for all. If you’re in the market for a new account, follow these steps to find a new one, close your old bank account, and transfer your money to your new account:
Choosing a New Account for Your Money
There’s good news for those looking to find a better place to stash their cash, however. There are more options than ever when it comes to banking. Instead of staying stuck with an account that charges exorbitant monthly fees or offers abysmal interest rates, you can switch to an account that meets your needs and doesn’t charge any account fees at all.
That could mean no overdraft fees, no account minimum fees, atm fees, and no foreign transaction fees. Sounds good, right? More people are moving away from traditional checking and savings accounts, in favor of “deposit accounts,” which let you keep access to your cash while simultaneously earning a higher interest rate.
How To Close a Bank Account
In order to move your cash to a from one bank to another, or into a deposit account, you’ll need to close your old account. While this process can seem daunting, three easy steps will help you break up with your old bank once and for all.
Cancel Automatic Payments and Direct Deposits
If you’re like most of us, you rely on autopay to simplify your banking. This means that each month your various bills and subscriptions are automatically deducted from your primary account on their due date. To avoid falling behind on bills or accidentally getting your streaming service suspended, you need to turn off or redirect every automatic payment that currently comes out of the account you wish to close.
Take a look at your monthly account statement and make a list of every automatic deduction, from your electric bill to newspaper subscriptions. Once you’ve made your list, log in to your each of your service provider accounts and change your payment information.
You can either update your monthly payment, so they are deducted from your new account or choose to forego automatic payments until your new account is in order. If you cancel your automatic payments instead of transferring them to your new account, make sure to add each bill due dates to your calendar to avoid accidentally missed payments.
Additionally, you’ll need to re-route any paycheck direct deposits you have set up at the bank account you want to close. You can ask your employer to either issue you a paper check or redirect your paychecks to your other account.
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Wait For Any Pending Transactions To Clear
After you’ve canceled or rerouted all the automatic payments that deduct from the account you want to close, you will need to wait for any pending transactions to clear. These pending transactions are usually for bills or subscriptions that have one remaining payment left before the company can change your payment information.
Waiting for all pending transactions to clear ensures that your bills will be paid and your subscriptions will continue without facing any overdraft fees. Make sure there is enough money in the account you wish to close to cover any pending payments and then wait two weeks to one month for any automatic payments to be deducted.
Visit Your Bank
As millennials, most of us want to avoid frustrating interactions with salespeople and would prefer to figure out how to close a bank account online. Unfortunately, most big box banks have made it almost impossible to close a bank account online without visiting a bank branch in person.
Commissions for bankers have historically meant that the person behind the counter at a big bank might try to convince you to keep your account open, or even open a different account with the same institution. When you visit your bank, ask to close out your account.
They will likely require you to provide identification, sign a form consenting to the closure of your account, and will work with you to set up a transfer of your funds to a different account or issue you a check for the value of the money remaining in your account.
Fortunately for some of us, a few banks now allow you to close your bank account online, either by sending an email requesting to close the account, or chatting with customer service through the bank’s website. Check your bank’s FAQs to see if you can close your bank account online.
Whether you close your account online or in person, make sure to request written confirmation that the account has been closed. When you receive the letter confirming your bank account is closed, make sure to save it somewhere safe for future reference.
How To Transfer Funds From One Bank Account Into Another
The bright spot in the often very long process of closing a bank account is getting your new, improved account funded. First, make sure to set up direct deposit from your employer directly into your new account. This will ensure that your pay appears in your account without having to deposit a physical check.
To set up direct deposit for a new account, visit your HR or pay office and provide them with the new account information, including the new account number and routing number.
To transfer funds from one bank account into another, you have a few options. If you close your account in person, you can ask your bank to transfer the remaining balance to your new account. Just make sure to bring along the new account and routing number. These transfers may take several days, so make sure to ask how long you should expect to wait.
You may also be able to get a check for the amount remaining in the account you’re closing directly from the bank, or even cash if it is a relatively small amount of money. If you get your remaining balance in cash or check form, make sure to deposit it in your new account right away. Funding your new account means your payments will remain interrupted and you can take advantage of any new perks right away.
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SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC . Neither SoFi nor its affiliates is a bank.