What Do You Need?Before you make the switch, you first have to figure out what services your new financial institution needs to have.
Credit Union or Bank?Want lower fees? Better interest rates? Consider switching to a credit union instead of a bank.
Make the SwitchChanging billing info, closing old accounts — there are a few (easy) steps to take before you officially make the switch.
So, you’re a millennial who’s finally spreading their wings and learning to fly. Okay, sorry about the lame metaphor. What we’re saying is, you’re moving. Whether you’re finally leaving that job you took right after college or moving in with that long-distance girlfriend, there is always a long list of to-do’s and questions when moving … like how to switch banks.
Maybe you kept the same bank or credit union your parents had, or maybe your current bank doesn’t have any locations in your new city (or the entire state). Even though you may have been with the same bank for years, it’s time to grow up and find a new place you can call your own.
In this post, we’re going to talk about how to find and how to switch banks or credit unions. Whether you’re in the situation we just described or you’re switching for other reasons such as being in the military, we can help.
Switching Banks or Credit Unions
Changing your bank or credit union isn’t too complicated, but there are a number of things you should consider. Chances are, especially if you’re like the hypothetical millennials we just talked about, your financial priorities are going to be different than your parents’ — they may even be different from your own priorities circa 2010.
What Do You Need?
First, you need to figure out what features are important to you.
Do you need plenty of ATMs?
What about ATM fee reimbursement? Many larger banks have a lot of hidden fees that are insanely high or happen frequently — both.
Or maybe you’re determined to have online banking? Or an app?
Make note of your must-haves before you start looking for your new financial institution.
Credit Union vs Bank
If you’re moving and wondering how to switch banks, maybe it’s time to consider abandoning banks all together and make the switch to a credit union.
There are a lot of really great reasons to consider a credit union, especially if you’re trying to gain financial independence or recover your credit score.
Because credit unions are owned by their members, they don’t have a reason to force stupid, unnecessary fees on you. There are still some fees, but they typically make sense, unlike a processing fee and management fee and breathing fee (okay that one doesn’t exist — we don’t think) that banks like to pile on top of one another. And the fees credit unions do have are often lower than bank fees.
Higher Interest on Savings
Remember how we said credit unions are owned by the members? Credit unions were founded to help regular, working-class people gain greater control over their finances and help them help each other.
That means any of those fees you get charged aren’t going into the pockets of bankers — as a member, they’re going back into your pocket in the form of higher interest on savings.
Lower Interest Rates on Loans
If you’re moving to a new city with plans to get a new car or home once you get there, a credit union can be a really good fit. Alongside those higher interest rates on savings accounts, credit unions also offer lower interest rates on loans. Credit unions want to help people build a solid financial future, so not only do you get lower interest rates on loans, but many credit unions also offer financial literacy programs to help you as you pay off that loan.
No Old White Men at the Top
Most importantly (not really … okay maybe really), since credit unions are owned by their members, there isn’t a group of faceless, old white men in suits trying to squeeze every last penny out of you through fees, high interest rates on loans and low interest rates on savings accounts.
You and the other members own the credit union, and often get a say in how the credit union operates. Sound like a sweet deal? We thought so.
Change Your Billing Information
Here’s another part of learning how to switch banks: if you’re like every other millennial, you probably have at least a dozen subscriptions, auto-draft bills and payment apps. Don’t forget to check and see how many subscriptions you have — Netflix, Hulu, Amazon Prime — because the billing info for each of these will need to be changed.
And don’t forget store credit cards. Say you have a Target credit card, and it’s paid off via auto-draft from your checking account every month. Forget to change that billing information, and you might get hit with some costly late fees. Even worse, you could get sent to collections if you don’t notice you’re overdue, and your credit score will take a hit.
I once had a $30 charge sitting on my Ulta credit card and didn’t see the bills. I paid over $100 in late fees and my credit score dropped from Excellent to Average. When this happens, your score often recovers relatively quickly once you pay off the fees, but not always. (Mine bounced up to Good, but not Excellent … yet.) Sometimes it can take up to seven years for your credit to fully recover.
Make a list of all the things you’ll need to transfer once you open your new account. Here’s a quick list to get you started:
- Subscriptions (Hulu, subscription boxes, Spotify, etc.)
- Store credit cards
- Bills (energy, cable, water, etc.)
- Recurring transfers (like if you auto transfer $100 from checking to savings every month)
- Direct deposits (like your paycheck)
- Accounts that withdraw money (iTunes, Venmo, CashApp, etc.)
- Budgeting apps or tools that track your spending (Mint, Clarity, EveryDollar, etc.)
Open Your New Credit Union Account
Check the Membership Requirements
Another cool thing about credit unions is they usually have pretty lax membership requirements. So if you just moved cross country and your new job didn’t give you a relocation stipend and you’re spending most of your last paycheck on gas, do not fear! While banks often have a high minimum deposit when opening a new account, credit unions usually ask for less than $100. Sometimes there’s no minimum deposit required at all.
Make the Call (or the Click)
Once you’ve found the right credit union for you and made a note of all the accounts you’ll need to update, it’s time to open up your account! This is usually as easy as heading to their website, clicking through a few pages and entering some information.
However, some credit unions don’t have as many online capabilities as banks, so if they don’t have an option to set up an account online, give them a call!
Each credit union operates a little differently, but they’ll help walk you through the process of transferring your moolah.
Close Your Other Account
Once your money has been transferred, you’ll want to contact your bank and break the news: you’re leaving. Sayonara! You may need to pay a fee (lame, we know) or provide documents to officially close the account.
Make sure to ask the bank to give you proof, in writing, that the account has been closed. Keep that record so you have it if they start trying to pull any funny business.
Don’t Close Lines of Credit
If you have any credit lines open, try to avoid closing those if you can. Every time you close a line of credit (especially if it’s more than a few years old) your credit score takes a hit.
You don’t have to use those credit lines — just leave them open and unused. If you have trouble leaving your credit cards untouched, cut the card in half or drop it in a cup of water and freeze it! (Yes, people actually do this.)
Make the Switch
Now that you know how to switch banks, all that’s left is to do it. Banks offer certain benefits, but when it comes to responsibly learning to use your money to become a Real Adult, credit unions are the best option. They were founded on the basis of helping people, and they still operate under that mission today.