How to Change Bank Accounts

Start New Financial provides you with step-by-step instructions on how to easily switch banks. Call us TODAY for all the help you need with your debts.

How to Change Your Bank Account

Some of the common reasons for people changing bank accounts are:

  • Moving out
  • High fee rates
  • Not having a checking account
  • Checking account is not meeting needs
  • The need for an additional checking account
  • Wanting to bank in a local community institution
  • Lack of convenient branch locations
  • Bad customer service experience
  • Lack of convenient ATM
  • Lack of features you want

The reasons to switch banks are many. Maybe the location of your new bank is better, its fees are less, or it has friendlier customer service and offers higher interest rates on savings accounts.

But after the decision to switch has been made by you, the process of transferring funds from one account to another is actually more complex than simply hitting a button. The switch has to be done intentionally once you’ve chosen the right bank because a lot of things are there that can go wrong.

Here’s a step-by-step of how to switch banks:

  1. Open Your New Account
  2. Inventory the Outstanding Checks and Automatic Bill Pay
  3. Automatic Payments Must be Redirected to Your New Bank
  4. Direct Deposits Must be Redirected to the New Bank
  5. Checking Account Must Have Savings Linked to it
  6. Both Accounts Should be Kept Open
  7. The Old Savings or Checking Account Should be Closed

1. Open Your New Account

The first step is to find a bank near you that you can replace your account with. The easiest way to do this is by doing a Google search.

Opening an account at your new banking institution is the first step to switching banks. This process can be completed online, as allowed by many banks, by simply filling out a form with your name, contact information, address, employment details, driver’s license number and other information. You will then receive a new debit card for your checking account with your new bank account information.

The new account will also need to receive an initial deposit from you. To know we?ll be covered for that month, we like transferring enough that will cover bills for a month, including rent.

Find out and see if your new bank offers a switch kit. Some financial institutions make this resource available to help you sever ties with your old bank and to transfer your money. In order to locate one, ask a customer service representative from the particular bank or do an online search for your bank’s name and the term switch kit.

If the savings account you’re opening is a stand-alone, this step, coupled with closing your old savings account (find out more on closing accounts below), might be all you need to do. It can be more complicated, however, to switch banks with a checking account.

2. Inventory the Automatic Bill Pay and Outstanding Checks

  • Analyze all your bank records, observing the automatically deducted expenses and regular bills via an individual company’s payment tools or through your bank’s bill-pay service.
  • Be sure to look for:
    • your monthly mortgage payments or?
    • your rent checks,
    • ?your credit card payments,
    • your electricity bill,
    • your water bill & gas bill,?
    • your beer-of-the-month club dues
    • your gym membership fees, and whatever else you have automatically deducted from your account regularly.
You should review more than one month?s worth of expenses. Make a note also of any semiannual, annual or quarterly bills that automatically ping your account. For instance, you may have other less frequently withdrawn funds that are also done so automatically, such as health care expenses, sewage fees, and insurance payments. It is intense to look at a full year’s worth of expenses ? but it generally helps nothing get by you. Lastly, we recommend you ensure you don’t have any uncleared outstanding checks.

3. Automatic Payments Must be Redirected to Your New Bank

Start to redirect automatic payments to your new bank account as you review your regular expenses. Whether you previously funded your bills through the individual company’s bill-pay tools or through the automatic bill-pay system at your old bank will determine how you switch them over. Throughout the first few months of the switch, you?ll want to keep an eye on your regular bills and make sure that from your new account each bill is set for payment.

4. Direct Deposits Must be Redirected to the New Bank

Remember that your paycheck and all automatic deposits must be redirected by you to the new account. To complete this step, it?s very likely that you will have to fill out a form with your employer. Please keep in mind that for this new system to take effect it could take a couple of months. It is not overnight that direct deposits may switch over.

5. Checking Account Must Have Savings Linked to it

Opt to link your savings and checking accounts when setting up your new account. That way, in order to save for a vacation, fully fund an emergency fund and accomplish other savings goals, automatic transfers between the two accounts can be set up by you. You cover yourself by connecting these accounts, in the event you accidentally overdraw your checking account, because if you inadvertently overspend, many banks will allow you to fund your checking account by pulling from your savings.

6. Both Accounts Should be Kept Open

To link with the new bank account, it can take bill payments and new deposits a couple of months. Therefore, to play it safe, you should keep both accounts funded for at least two months. To make sure the payments you’ve transferred over are coming from the right account, take advantage of letting both accounts run in parallel for a little spell. Bear in mind that, while you juggle two accounts, you may have to continue paying any monthly low-balance fees or service fees.

7. The Old Savings or Checking Account Should be Closed

It’s time to officially bid adieu to your old bank account once you’ve gone through the process of transferring automatic deposits and payments.

To close your old account, you may need to jump through some hoops – depending on the bank. Closing can sometimes be tricky because they want to retain you. An official letter requesting the closure of your account, accompanied by certain identification proof submitted by you, may have to be sent to the bank from you. Thus, you must ensure to follow every step and understand the process involved. To make sure you’ve met every requirement, it might very well be worth heading over to the closest brick-and-mortar location. A fee is sometimes charged by some banks for closing. You certainly will want to shred or cut up any checks or debit cards associated with your former banking institution.

Make sure that the old account is closed by getting written proof of confirmation from the bank . Most banks generally send it out to you automatically, but it?s good to ask them. You?re good, once you have your confirmation. Kudos to you! You have successfully switched banks officially.

Savings and Checking

Online banks may charge fewer fees in addition to higher interest rates on savings. For instance, for a savings account, an online bank may not charge a minimum balance fee or a monthly maintenance, while a traditional bank may charge either of these fees.
The bank may reserve the right to close your savings account altogether or to convert it to a checking account if you exceed the six-withdrawal limit regularly.

  • To make paying bills, transferring funds, and spending money convenient is what checking accounts are designed for ?the number of transactions on it that you can have per month typically has no limit.
  • Savings accounts are subject to federal regulations governing the number of withdrawals you can make each month and can help you grow your money with interest.
  • ?It?s important to consider the fees when researching savings and checking accounts, withdrawal rules, banking access, and annual percentage yield you can earn on deposits, among other features.

Different financial purposes can be served by savings and checking accounts. You may be wondering whether a checking account or a savings account is better equipped to meet your needs when it comes to managing your money. Surprisingly, 25% of American households are either unbanked or underbanked, meaning they have no bank account at all or have a bank account but still rely on nontraditional financial services.?? For staying on top of your finances, both types of bank accounts can help meet different needs, even if they don?t function in the same way.

What?s a Savings Account?

A deposit account that holds funds that aren?t earmarked for covering spending or paying bills is what a savings account is designed for. To save money for home improvements, set aside money for a vacation, grow your emergency fund, build your down payment fund for the home you?re planning on buying, or to save for your retirement, are examples of what people would open up a savings account for. You can find savings accounts offered at online banks, credit unions, and traditional banks, just like checking accounts.

You?re less likely to earn interest with a checking account than with a checking account. As an incentive for keeping their money in their savings accounts, banks pay savers an annual percentage yield (APY). However, savers do not earn a uniform APY, as it can vary from bank to bank. As of January 2021, the national savings rate on average was 0.05%.

Compared to an online savings account, the traditional checking account is not a better option since the former has a rate that is almost 20 times higher than the latter. As a matter of fact, purchasing a 10-year Treasury bond is very similar to what you would earn with the online savings account.

Due to their lower operating and overhead costs, savers often receive higher interest rates that are passed on to them from the capability of online banks. It?s not unthinkable to find high-yield online savings accounts from credit unions and banks earning an APY in the range of 1.90% to 2.25%, even though the rates can vary widely. Savings accounts nevertheless have a catch associated with them.

What Is a Checking Account?

An account held at a financial institution that allows you to make deposits and withdrawals is called a checking account. Both check-writing and debit card capabilities are offered by these accounts. Cash withdrawals made at an ATM or a branch, as well as ACH transfers, money orders, checks, debit card purchases, and wire transfers are all transactions and withdrawals that can be made from a checking account. Similarly, deposits can be made by depositing money orders, checks, or cash at an ATM or a branch, as well as via wire transfer, transfer, automated clearing house (ACH), transfer, or mobile check deposit. A checking account is the best way to use funds for daily transactions.

If you need to do any of the following, then a checking account is useful:

  • Transfer money to an account at a different bank electronically
  • Pay bills electronically or via check?
  • Make purchases or ATM withdrawals using a linked debit card

Checking accounts may not or may be interest-bearing, meaning that as long as it stays in your account interest is earned on the money you deposit. These accounts can be offered by online banks, credit unions, and brick-and-mortar banks.

Savings Accounts and Regulation D

The fact that withdrawals are virtually unlimited is a key mark in favor of checking accounts. Without being penalized by the bank, you could use your card 10 times a day to make daily cash withdrawals or shop. On the other hand, access to your money is on a more restricted basis with savings accounts. The limits of withdrawals from a savings account under Regulation D should be clearly understood by new clients. Usually it is no more than six withdrawals a month; violation of this can get you the loss of your interest rate offer or make you face excessive fees.

Federal Regulation D specifically states that:

  • Withdrawals from savings accounts are unlimited when made at an ATM, via mailed request, or in-person.
  • Savings accounts, money market accounts, and share savings accounts all have a limit of a maximum of six withdrawals per month.?
  • Transactions that count toward the limit include debit card point-of-sale transactions, transfers or withdrawals made via fax, ACH withdrawals, overdraft transfers from savings to checking, and transfers made by phone or via online banking.
An excess withdrawal fee can be charged by the bank if you exceed the six withdrawals allowed per month. Some banks can penalize you for every withdrawal you make beyond the six. The less fees you pay, the more of your original deposits and interest earnings you get to keep.

Which Is Better, Savings vs. Checking Accounts?

You may find that one is better suited than another to your needs, when you compare savings and checking accounts, and in some cases it is from using both that you may benefit most. When shopping around for a savings or checking account, here are some questions to consider.
  • Does a savings and checking account carry a daily limit on deposits?
  • For checking accounts, do ATM withdrawals carry a daily limit?
  • Does the account earn interest, and, if so, what is the APY?
  • What are the account?s fees, such as a monthly maintenance fee?
  • Do you need to meet a minimum balance requirement in order to have such an account?
  • Does the account earn interest, and, if so, what is the APY?
The bank might offer a special perk for opening a new account; check it out. In a ridiculously low-interest-rate environment, banks are highly competitive so they occasionally have incentives to make a savings or checking account more attractive. For instance, you could enjoy promotional deals for opening other accounts, such as a certificate of deposit or money market account, or they may allow you to join a money-saving discount or debit card rewards program.

Last but not least, bear in mind the kind of access that works with you when it comes to banking. Whether you choose a savings or checking account, consider whether the bank offers the mobile and online banking tools you need to manage your money digitally, the number of ATM locations, and whether branch banking is available, if that?s something you occasionally use and value.

An escrow account is a bank account under the control of a third party. They are most often used by buyers and sellers to a real estate transaction. The seller often takes the buyer?s deposit and, with a title company or an escrow agent, opens an escrow account. The escrow officer oversees the closing and ensures that everyone is properly paid. An example is that some people create an escrow account when their landlord has refused to make repairs in their apartment, or if they want a dedicated account to pay for non-monthly bills.

How to create your personal escrow account for debt settlement

1. Identify your needs. Someone who has difficulty controlling their spending can benefit from a personal escrow account. Since no third party oversees the account it isn?t technically an escrow ? but segregating your money into a separate account can benefit you. Personal escrows are often used for the following purposes:

  • Unforeseen expenses. The small expenses that catch you by surprise?gifts that as the host of a party you need to purchase, car repairs, or unexpected veterinary expenses, etc.
  • Non-monthly expenses. For example, you might be billed annually for a gym membership and quarterly for life insurance. You can save sufficient funds for these expenses with the help of a personal escrow.
2. Calculate how much you will need. Verify how much you had to spend on non-monthly expenses during the past year by going through your old bills. Take into account your unexpected and miscellaneous expenses, such as that bottle of champagne you bought someone when you were invited to their dinner bash. Your non-monthly expenses could include:
  • car insurance premiums tuition or school expenses
  • holiday shopping
  • gifts
  • veterinary expenses
  • conference fees
  • life insurance premiums
  • car maintenance and repair?
  • car registration
  • ?car insurance premiums

Set up a savings account. For paying non-monthly bills and for use for specific purposes, you should set up a separate savings account or high yield checking account. Though it could be difficult for you to handle, multiple individual accounts could also be set up by you, for each non-monthly expense.

  • Total all non-monthly expenses, then divide by 12, so you can properly fund your account. To contribute to your account each month, you will need this amount.
  • So that this amount is deducted from your monthly paycheck, you should set up automatic deposit. Divide your total amount by 26 if you are paid biweekly.
3. From your escrow account, go ahead and pay your non-monthly expenses. Remember to take the money out of your escrow account whenever a non-monthly or unexpected expense arises. You can preserve the balance in your regular checking and/or savings account in this way.
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