Tips for a smooth transition on Bank Transfer Day
Today is Bank Transfer Day, which encourages you to switch your money to a credit union or smaller bank if you are unhappy with your current bank.
According to a Consumer Reports survey this past summer, nearly one-fifth of all consumers with checking accounts considered switching to a new financial institution over the previous 12 months.
“Consumer frustration has only grown over the past year as bank fees have continued to rise,” says Suzanne Martindale, staff attorney for Consumer Union, the advocacy arm of Consumer Reports. “But many frustrated consumers end up staying with their bank because switching to a new financial institution can turn into a big hassle.”
Consumers Union renewed its call for Congress and the Consumer Financial Protection Bureau to enact reforms that would make it easier for consumers to move their money to a new financial institution. “It’s time to make it easier for consumers to move their money so they have a real choice when it comes to where to bank,” says Martindale.
You’re more likely to find lower fees and better rates at community banks, larger credit unions, and online institutions.
Tips to help guide you to a new bank:
- Open your new bank account with a small deposit, leaving the bulk of your funds with your old bank. Deposit just enough to avoid any fees you may be charged for maintaining a low balance.
- Next, make a list of all the automatic payments and deposits scheduled to go in and out of your old account each month. If you have direct deposit, ask your employer to reroute your paychecks to your new account. Find out what date the first deposit will occur, then reschedule each automatic payment or debit to come out of your new account and make sure to ask the company what date the change will apply.
- Leave some cash in your old account for at least one month.
- Once you are sure that all automatic payments and all direct deposits are coming and going from your new account, electronically transfer the final funds from your old account.
- Once the transfer clears, follow the procedure laid out by your old bank to close your account. If you don’t close it, you might get hit with a monthly account maintenance fee even after you stop using it. Get written confirmation that the account is closed.
For more read our report on how to fight back or flee when facing more fees and what to do if you’re being nickeled-and-dimed by your bank.