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 ?
People change bank accounts for some of these common reasons:
- 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. Perhaps you find that your new bank has the better location, less fees, or its customer service is friendlier and on savings accounts it offers higher interest rates.
But the process of transferring your funds from one account to another, after you decide to make the switch, is not simply hitting a button but actually more complex than that. A lot of things are there that can go wrong, so you must make the switch intentionally as soon as you have chosen the right bank.
Here’s a step-by-step of how to switch banks:
- Open Your New Account
- Inventory the Outstanding Checks and Automatic Bill Pay
- Automatic Payments Must be Redirected to Your New Bank
- Redirect the Direct Deposits to the New Bank
- Checking Account Must Have Savings Linked to it
- You Should Keep Both Accounts Open
- The Old Savings or Checking Account
1. Open Your New Account
When you wish to switch banks, the first order of business is opening an account at your new banking institution. 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. With your new bank account information, you will then receive a new debit card for your checking account.
An initial deposit from you must also be made into your new account. We like transferring enough to cover rent and bills for an entire, just to be certain we’ll be good for that particular month.
Check to see if a switch kit is offered at your new bank. To transfer your money while helping you sever ties with your old bank, there are some financial institutions that make this resource available. Do an online search for your bank’s name and the term switch kit in order to find one, or in the particular bank’s customer service department just inquire with a representative.
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. However, with a checking account it can be more complicated to switch banks.
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
- whatever you regularly have automatically deducted from your account, such as your gym membership fees.
You should review more than one month’s worth of expenses. Make a note also of any bills that automatically ping your account, whether they’re quarterly, semiannual or annual bills. 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
As soon as you review your regular expenses, your redirecting of automatic payments to your new bank account should commence. 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. You certainly will want to keep an eye on your regular bills throughout the first few months of the switch just to ensure that each bill is set for payment from your new account.
4. Direct Deposits Must be Redirected to the New Bank
The new account must receive from you the redirection of all automatic deposits and your paycheck. To complete this step, it’s very likely that you will have to fill out a form with your employer. It could take a couple of months before this new system takes effect. The switch over for direct deposits is never an overnight sensation.
5. Checking Account Must Have Savings Linked to it
When setting up your new account, choose linking your checking and savings accounts. You can set up automatic transfers between the two accounts in order to accomplish savings goals such as fully funding an emergency fund or saving for a vacation. By connecting these accounts, you are covered in the event you accidentally overdraw your checking account; this is because, if you inadvertently overspend, you are allowed by many banks to pull from your savings to fund your checking account.
6. Both Accounts Should be Kept Open
It can take a couple of months for new deposits and bill payments to go ahead and link with the new bank account. Thus, both accounts should be kept funded for at least two months just to be on the safe side. For a little spell, go ahead and take advantage of letting both accounts run in parallel to make sure the payments you’ve transferred over are proceeding from the right account. Be mindful that you may have to continue paying service fees or any monthly low-balance fees while juggling two accounts.
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.
It all depends on the bank, but sometimes one needs to jump through some hoops in order to close the old account. Since the banks’ plan is always to retain you as a customer of theirs, closing an account can be tricky at times. You might have to submit to the bank a request for closure of your account, in the form of an official letter, coupled with proper proof of your identification. Therefore, you must fully understand the process involved to be sure you’re following every step correctly. It could be worth your trip to your closest brick-and-mortar bank location just to ensure that every requirement is being met by you. Closing sometimes commands a fee in some banks. Any association with your former banking institution, such as old checks or debit cards, should be destroyed by you (cut or shred).
You need the bank to confirm it to you in writing that the old account is closed so you can be sure. 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
In savings accounts from online banks, the fees you are charged may be fewer in addition to higher interest rates. For example, 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.
- The number of withdrawals you can make each month from savings accounts are subject to the federal regulations that govern them 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?
If you need to do any of the following, then a checking account is useful:
- At a different bank, transfer money electronically to an account
- 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
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.
Which Is Better, Savings vs. Checking Accounts?
- Is there a daily limit on deposits in checking and in savings accounts?
- For checking accounts, do ATM withdrawals carry a daily limit
- Is interest earned in such account, and what is the APY, if so?
- 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?
- Is interest earned in such account, and what is the APY, if so?
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. More often it is sellers and buyers who use them in 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.
- car insurance premiums tuition or school expenses
- holiday shopping
- 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. When you are paid biweekly, simply divide your total amount by the 26 weeks in half a year (6 months).
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