Switching Banks: What I Wish I Knew

I recently embarked on a significant life change and moved from the Big Apple to the Big Easy. Everyone who has moved knows what a pain it is, and I’d argue that stress (both mental and financial) is significantly heightened if you’re moving into or out of a major city.

For the most part, my move from New York City to New Orleans was pretty easy. Instead of holding tight to my large valuables like my tufted headboard (my first big girl purchase) or my TV, I made the decision to sell these things and just ship my clothing and other small valuables, and make use of Southwest’s two free bags. I have to say, I was patting myself on the back for being so fiscally smart with my move… or so I thought.

Fast forward two wonderful weeks in New Orleans, and I realized I needed to grab some cash to take the bus home from work. To my dismay, it was then that I found out that my beloved bank of seven years, Wells Fargo, was nowhere to be found. The closest location was in Mississippi.

Me: Not a big deal, right? There are plenty of banks in New Orleans and the online world makes everything easier!!

The universe: Wrong. Changing banks is actually not very easy.

After working at a tech startup for more than a year, I assumed our banking system had to have seamless capabilities for moving money around and went into this pretty blind.

I’ll spare you the gory details, but I can tell you the resulting situation was a bit of a mess that revolved around fighting overdraft fees and all my money being tied up in a wire transfer for more than a week. Not to mention the stress of not being able to “touch” my money. It’s a little unnerving – especially when you’ve just moved and need to access funds. But not every person has been taught how to switch banks when you need to, but then again it’s not something you think you’ll need to know.

Since no one bestowed this wisdom upon me, I’d like to help the next cross-country mover (or bank changer) properly handle this situation.

Cancel All Your Auto-Payments

At least 30 days out, cancel all your auto payments into and deposits from your current bank account. Think: the paycheck deposited from your work every two weeks, your car loan payment, student loan payment, cable bill, electric bill, etc.

The reason I say 30 days out is because it can take time to process this auto-payment. And, if they’re not processed in time, the funds will be removed from an empty account, which will result in overdraft fees, or deposited into an old account you thought you just closed. The latter would be really heartbreaking. More coming soon on that subject.

With me, I decided to wire my funds directly from the Wells Fargo account to my new Chase checking account. However, I was too late to get the cut off date for canceling my student loan auto-payment. Therefore, the money was going to be removed no matter what and would result in me incurring overdraft fees. This might not seem like a big deal, but the money I wired was essentially frozen for seven days (until it was posted). I couldn’t change the amount I was sending to have 150 less dollars because I didn’t want to make the process of depositing my funds to Chase any slower than it already was.

Fortunately, my significant other wrote me a check for my loan payment that I deposited into my Wells Fargo account immediately upon realizing my mistake.

Consolidate Your Money

Some people might disagree with me on this one, but I thought this made my life a lot easier. Through Wells Fargo, I had three accounts: checking, savings and a Way-to-Save account.

To easily (ha-ha) wire my money, I put everything into my checking account and once it was “posted,” closed my savings and Way-to-Save accounts. It was kind of a pain because you can’t close those other accounts until the money is officially posted into your checking account. Took about a day.

Once I had everything in my new Chase checking account, I opened a savings account and disbursed everything accordingly.

The reason I liked this option was because I only had to deal with one wire transfer instead of obsessively checking multiple transfers. Additionally, there can be fees associated with wire transfers (ugh), so this limits the amount of fees you’re paying to move your own money. Wells Fargo did me a solid and didn’t charge me a wire transfer fee, but I’m not sure all banks would be this generous.

Research What Kind of Account You Want Beforehand

Just like when you’re opening a brand new account, you’ll want to decide which type of account you want before switching bank accounts. I didn’t do the research but was pretty prepared to see a basic account with stipulations about direct deposit amounts (in order for the account to be free) or some kind of fancy account that had annual fees but “perks” like unlimited free (?!?) checks.

However, if you hate being put on the spot, look on their site and find out what your options are. I went with the basic account, which was free because I get my work paychecks direct deposited into my account. I’m no financial planner, but I don’t know who would need one of the fancy accounts with free checks — unless you like to collect artisanal checks.

For most banks, you can just go online and open an account. In retrospect, that is 100% what I should have done. However, I thought going in person would provide me with more hand holding on how to quickly transfer my funds since I was in a pinch.

I was incorrect…

If You’re Going Into the Bank, Make An Appointment

I kind of laugh that I even need to make this a point. Like I mentioned above, I’m really bad about scheduling appointments in advance.

For example, if I decide I want a haircut, I need to get it either that day or the next. I don’t believe in booking an appointment a week in advance. I know this is weird, but it’s a quirk of mine.

The same can be said for how I handled this situation. I realized I needed to get this banking issue out of the way and decided to show up at Chase an hour before they closed on a Friday to get it handled ASAP. I also did this because I thought I could get cash immediately to take the bus home. Please don’t do this. I had to wait 30 minutes and then didn’t have enough time to open a savings account too. I also left with no cash.

If you want to go the in-person route, call the bank you’re going to switch to, make an appointment and ask them what you need to bring to seamlessly open a new account and get your funds deposited quickly.

They’ll likely say:

Two forms of IDA check or cash to deposit into the account to officially open it. For Chase, you had to make a minimum $25 deposit into the checking account.*

*This part was a huge mistake on my part. Like I mentioned above, I had $0 in cash. Therefore, I used my Wells Fargo debit card to deposit a $25 cash advance to open my Chase account. This resulted in a fee **surprising** that I didn’t account for in my wire transfer amount. Again, Wells Fargo did me a solid and instead of charging me a overdraft fee AND this $3 fee, they pardoned it from the account.

Write A Check

This is important. While I completely lucked out with having a free wire transfer, it took a long time (a week with my funds basically locked!!) to get the money posted, and it really stressed me out. I obsessively checked my account every day to see if maybe it would post to my Chase account a couple days early. Spoiler alert: it didn’t.

If I had a time machine, I’d go back, and write a check from my Wells Fargo account to my new Chase account for the exact amount I had consolidated into my checking account. As you know, checks only take a couple days max to post.

Get Cash (!)

I know this might seem like a “duh” piece of advice, but we’ve become so reliant on our credit cards and debit cards for payment. However, there are situations in life where cash is absolutely necessary. And, ATM fees should always, always be avoided at all costs. To this day, nothing hurts my financial heart more than if I’m in a pinch for cash and need to pay an out of network bank and my bank fees for taking out MY money.

If you know you’re going to be in the process of switching banks, and moving, take out a couple hundred dollars to hold you over for a week to 10 days. Your credit card is one thing, but you don’t want to use your debit card when you’ve written a check or wired money that hasn’t been withdrawn yet. Hello, overdraft fees! And, like I mentioned above, once you’ve picked an amount to wire, you are married to that amount so you can’t just take out $20 here or there.

Your Checklist

If you’re in the process of switching banks, you probably already know that it’s not the easiest thing you’ll have to do. Let this checklist guide you on how to switch banks:

30 days prior to switching banks:

Cancel all direct deposits and auto-payments from old bank account

At least two weeks out:

Research which type of account(s) you need to openOpen your new bank account ONLINE

Do:

Consolidate your money into one accountGet cash out to hold you over for a weekHave a blank check handy whether you choose to open your new bank account in person or onlineIf you want to open an account in person, schedule an appointment

Don’t:

Move without checking if you have ample access to your current bank in a new city 🙁Don’t do a wire transfer unless you’re comfortable having no access to your money for a week and you are OK with potential transfer fees

While I eventually was able to successfully close my old bank accounts, avoid bank fees and start fresh with a new financial institution, I know without a doubt that I didn’t plan properly or take the easy route.

Now, It’s your turn. Pass this wisdom on.

Have a friend or family member that’s moving sometime soon? Ask them if their existing bank is in their new city. That simple question will get the wheels turning if they need to go through the bank-switching process.