How to Change Banks

I have recently read a study that demonstrates that the average person is willing to put up with bad fees, horrible customer service, and a bad experience at their bank because it is simply too inconvenient to move.  I am apparently an anomaly, as I am in the process right now and I don’t think it is all that bad.

As I said last week, I am preparing to move my primary banking from Capital One 360 to Charles Schwab Bank.  I have nothing bad to say about Capital One 360 (formerly ING Direct), but the benefit of check writing and no ATM fees is a big draw.  I also have my brokerage and credit card accounts at Schwab, so it will be easier to have everything under one roof where I have only had exceptional customer service.

When you are moving banks, the key is to understand your cash flow and slowly bring everything to the new bank.  If you use direct deposit, automatic payments, and online bill pay, you will surely forget about something and pay an overdraft fee or have a payment returned if you try to hit the switch all at once.

To ensure I don’t make a mistake, I am moving slowly.  Step one, which I am on now, is to move my income into the new account.  This is not going to be all at once, as I still plan to pay bills at ING for a couple of months while I move things over.  I have my work direct deposit set to put $100 into the new account on payday.  Assuming it works, I will move 50% the next month so I can start moving my bills to my new bank, but I want money at ING in case an unexpected bill comes in there.

Over the next few pay periods, I will slowly move all of my income and expenses into Schwab, leaving an emergency cushion of about one month’s rent, the highest bill I have, in my 360 Checking account.  I already have the new account on Mint.com, so I am tracking income and expenses from both banks.

I do not plan to keep my ING accounts open indefinitely.  While I feel some emotional attachment to ING as I signed up at a pivotal time in my life where I really began to take control of my financial situation, it is not logical to maintain an account just to keep it open.  Unlike credit cards, closing a bank account has no impact on your credit score.  As long as all of my income and expenses are moved and the account has had no activity for a few months, I will move everything to Schwab.

Charles Schwab Bank, like Capital One 360, is primarily an online bank.  Schwab has one branch in Reno, Nevada, but otherwise operates by mail and internet only.  I plan to keep my US Bank account open, as I have for about ten years, as a backup.

Have you ever moved banks?  Please share any tips you have in the comments so we can all learn from each other’s experiences.

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