How to break up with your bank: Steps on how to switch from one financial institution to another

February 13, 2024

By Anne Purcell

How to break up with your bank: Steps on how to switch from one financial institution to another

Are you unhappy with your current financial institution? Maybe it’s the low-interest rates or high fees. Perhaps you’re unhappy with the customer service or looking for a bank that can provide a better digital experience. Whatever causes you dissatisfaction, switching to a new financial institution could help change that.

You may think that switching to a different institution sounds like such a hassle. Depending on how long you’ve been at your bank or credit union, you may have many accounts, direct deposits and subscriptions linked to it. Just thinking about switching everything over gives you a headache. If this sounds like you, here are tips on how to easily switch from one institution to another.

Do your research

Like any big decision, starting with some research is always a good idea. With many options available for where to bank, you want to ensure your switch is a good choice for you and your goals.

Start by listing what you want in your financial institution, like enhanced security measures, credit cards, online and mobile banking, etc. Next, compare different aspects of the banks and credit unions you are interested in, such as interest rates, or certificate offerings and credit card benefits, to see which institution aligns most with your financial goals.

Open the new account

Before you close your old account, open the new one. While some financial institutions allow you to open your account online, like Alliant, others require you to go in person to open. When opening your account, have the following on hand:

  • An ID (driver’s license, passport, state ID, etc.)
  • Proof of your mailing address (utility bill, signed lease, mortgage statement, etc.)

While having this information handy will help you make the first steps in opening an account, also ensure you have money on hand to make your first deposit. While some institutions do not require a minimum deposit, some do, so be sure to note that before you open the account.

Take inventory of automatic deposits and payments

Once your new account is open, go into your old account and take inventory of all the recurring payments or deposits you have linked to that account. Things to look for include:

  • Direct deposits such as from your job, child support, freelance work or another type of income.
  • Automatic bill payments such as rent, mortgage, water, electricity, insurance, etc.
  • Subscriptions and memberships such as the gym, Netflix, Spotify or other recurring costs.

After you take inventory of these recurring payments and deposits, update them to the new account. To update automatic bill payments, you must go into your account each specific bill and make the update. While this might seem like a hassle, doing it now instead of later will ensure you won’t forget something that could lead to an unwanted late fee.

This is also an excellent time to take inventory of specific automatic payments you no longer use. Maybe it’s an app you downloaded a year ago that you forgot about or a streaming service you hardly use. While going through your list of automatic payments, cancel the ones that do not serve you.

If you are nervous about missing an automatic payment, keep some cash in your old account for a few months. Watch that account, and if you see any money coming or going, update whatever is sending or taking the money out of the account to your new one. When you are sure that all updates have been made, you can close your old account without fear.

Close the old account

Once you open the new account, make your first deposit and switch over all your automatic deposits and payments, you can finally close your old account and put it behind you. Depending on the bank or credit union, you may have to do this in person or by calling customer service.

If you still have money in this account, transfer it over digitally to your new account or ask for a cashier’s check to cash or deposit later at your new institution. It is also a good idea to request a letter that states all your accounts at that institution have been closed and keep recent bank statements for your records, as you may need them for your taxes. Also, shred all other checks and destroy all credit cards associated with the old account.

While switching financial institutions can be a pain, the benefits of your new account will outweigh the slight annoyances. Stop putting off the switch and make the change today!

Difference between banks and credit unions

If you rely on banks to do your finances and are in the market for a new institution, try looking at a credit union instead. Alliant Credit Union is an institution that puts its members first through its not-for-profit model where all members are owners. With competitive rates for high-rate savings accounts and many options to save more with certificates, Alliant helps its members do more with their money. Learn more about becoming an Alliant Credit Union member.

Read more about the benefits of banking with a credit union:

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