Personal Finance

Want to Switch Banks? Here’s How to Do It.

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There’s lots of talk lately about people switching banks. An announcement by Bank of America that it would charge customers $5 a month to make purchases with their debit cards (though they and other banks have backpedaled recently), coupled with increased attention to the Occupy Wall Street Movement, has focused a spotlight on growing outrage over the fees charged by some of America’s largest banks.

All that discontent may culminate on Nov. 5, which some activists have declared will be a national “Bank Transfer Day.” Organizers hope that many consumers will decide to remove their money from major banks such as BofA, Chase and Wells Fargo, and open new accounts with smaller banks and credit unions.

[Article: BofA and Fellow Big Banks Drop Debit Card Fees]

“I started this because I felt like many of you do. I was tired—tired of the fee increases, tired of not being able to access my money when I need to, tired of them using what little money I have to oppress my brothers & sisters,” according to a statement by a woman named Kristen Christian, who says she founded the bank transfer movement. (Incidentally, Christian will be a guest on The Credit Line radio show hosted by Credit.com chairman and co-founder, Adam Levin this Saturday Nov. 5 at Noon ET/9 a.m. PT, streaming live on Los Angeles’ KFWB 980 AM.)

But switching banks is not as simple as marching into your local branch and demanding your money. Especially when so many people have their paychecks deposited automatically into their accounts, and use bank web sites to pay their bills, transferring to a new bank takes a bit more planning now than it used to.

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“Banks want consumers to come back weekly instead of monthly,” says Mark Schwanhausser, a senior analyst at Javelin Strategy & Research who focuses on the banking industry. “It does make it harder to disentangle.”

That increased hassle makes it more important than ever that consumers weigh all their options. And if you do decide to switch, make sure you’re ready.

“Be prepared. Know what you need,” Schwanhausser says.

So we at Credit.com decided to offer this all-in-one tip sheet to take you through the entire process, from deciding whether to switch, through setting up your new bill payments and closing your old account. The process breaks down into three major decisions:

  • Should I switch banks?
  • Where should I go?
  • How do I switch?

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Should I Switch Banks? »

Image: Ken Banks, via Flickr.com

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  • Roger

    Good article. One thing many people fail to do is leverage their total bank relationship. Banks consider the mortgage balance you carry with them an asset; therefore, they’ll likely waive checking account fees etc. So if you have a mortgage at wells, citi, chase, etc. and are looking to switch checking accounts, be sure to check out what your mortgage lender has to offer on a checking account. If your mortgage and your checking acct are at the same bank, and you’re being charged bank fees, call to be sure the accounts are “linked”.

    If you have a bunch of excess cash sitting at the bank, you may want to move the savings balance to online places like ING, HSBC, CapitalOne, etc. that tend to pay much higher interest rates on savings (since they don’t have the same brick & mortar costs to pass along to you). My opinion, though I’m not an expert.

    Great article Mr. Maag, interesting stuff!

  • Pingback: Want to Switch Banks Here | How To Fix Your Credit Guide

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