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Jul 23, 2014

How to Easily Switch from a Big Bank to a Community Bank

If you've gotten to the point where you’re at the end of your rope with a big bank and have been considering switching to a local bank, we want to tell...

by Switch to Community

If you’ve gotten to the point where you’re at the end of your rope with a big bank and have been considering switching to a local bank, we want to tell you it’s not as complicated as it seems. Even though people prefer community big banks, many hold back because they think switching is too much work.

Many people who are unsatisfied with their big banks for whatever reason, ranging from unnecessary fees to terrible customer service, often stay with them because the idea of switching all your finances seems too daunting a task to start. If you’re one of the unhappy big bank customers looking to switch to a local bank, follow this guide to help make the switch as easy as possible.

Find a Bank for You

For any number of reasons, you’ve decided that the big bank you’ve been using is no longer tolerable and you want to switch to a community bank. Community banks offer a wide range of services without the complicated fee systems of subpar customer service. That being said, it’s important to know exactly which bank you’re switching to before you start the process. TwoCents.LifeHacker.com suggests considering the following when looking for a bank that’s right for you:

  • Balance requirements
  • Are they involved in their local community?
  • Fees
  • Interest rates (and how they vary depending on your balance)
  • Convenience and ease of online banking
  • Do they support schools and other local institutions?
  • Bank locations (Find the ones near you!)
  • ATM locations and fees
  • Penalties
  • FDIC or NCUA insurance
  • Customer service
  • How do they support their community in general?

Weigh each of these variables carefully when switching banks. Which attributes matter the most to you?

Keep Enough in your Old Account and New Account while Making the Switch

Once you’ve found the community bank you want to switch to, you should understand that it’s a smart move to keep enough money in your old account. Check the balance requirements of that account and make sure you have enough during the switch in case you have outstanding checks or bill payments linked to your old account still. It would be best to keep more than the minimum requirement in the account in case an outstanding payment is charged.

At this point you have identified the community bank you want to switch to and have left enough money in your old account so nothing surprising happens. Now you must make sure that you have enough money to put in your new account. To avoid any fees, make sure you have enough money in both accounts during the switch.

Look for Processing Transactions and Scheduled Payments

Before you actually open up your new community bank account, look through your checkbook. Make sure you know which checks have cleared and which haven’t and plan accordingly with your old account (since that’s what they’re still connected to at this point). Next, go over your statement and make a list of all your automatic bill payments. This is where many people get trapped. They switch banks and forget about an automatic payment or two, forget to reroute to their new account, and have their old, closed account get billed. You have to think about bills you pay weekly, monthly, yearly, and any other type of timely automatic charge you may receive. Search through your online banking history to get a good idea of the auto-payments you make.

Open your Community Bank Account

Since you’ve identified the Community Bank you want to use and you’ve taken all the proper precautions with your old bank and auto-payments, you can open up that lovely local bank account. Don’t close your old account right away since there may be a check or payment you overlooked. Make sure to get new checks and a new debit card.

Now that you’ve got your new account, it’s time to update your bill payments and direct deposit info. Take the list of automatic payments you made earlier and update those accounts with your new banking information. Do what you can to fully understand any information about payment cycles. Make sure whether the next cycle will be able to go to your new account or if it has to go to your old one.

Close your Big Bank Account

Now you can finally be done with that big bank account that’s caused you so much trouble and start supporting your community with a local bank. Another useful bit of information coming from TwoCents.LifeHacker.com is to double check the following when closing an old account:

  • Your direct deposits are now coming into your new account
  • Your automatic bill payments are being deducted from your new account
  • All outstanding checks have cleared your old account
  • Your new checks and debit card have arrived

Depending on the bank you use, you might have to call, send a letter, or visit a branch location to close your account officially – big banks can be annoying like that. They can also issue closing fees depending on the bank or services you used. You can avoid closing fees by withdrawing the money in cash at a branch, writing yourself a check from your old account, or setting up an electronic transfer. Closing fees are just one more way for a big bank to nickel and dime you, but one of those options should help you as you say your final goodbye to them and a friendly hello to a community bank!

That should be all you need to do in order to switch to a community bank! That’s not too bad is it? For the small amount of effort you’ll put in, the benefits you and your community will receive from banking local will more than outweigh it! Start the process now by finding a community bank near you!


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