Is it time to switch banks?

It seems like there's a bank at just about every retail corner these days. Even though my bank already had three locations within 10 minutes of my home, a new branch is being built less than five minutes away.

Although I am fortunate to have my bank branches en route to almost any errand I care to run, there are those who are not so lucky.

Location may be one reason you are considering switching banks. Or maybe the customer service has deteriorated and now leaves much to be desired. For many banks, fees for everything from teller use to ATMs are adding up faster than interest rates on savings accounts. And maybe those savings and CD rates are lower than average.

Whatever the reason, do not be afraid to make the bank switch. There are enough banking options these days that it makes sense to occasionally take stock of your current financial institution, do your homework and make that final withdrawal from your former financial institution.

The decision process

Before making that final decision, create a list detailing what you DON'T like about your current bank. This will help you avoid choosing another financial institution that has those same pesky penalties or fees.

After making this list, write down what aspects are most important to you in a bank. Is free checking a must? Location is typically important. Don't forget hours of operation if you need to be on site often. If you're a hard-core investor, search out CD options and IRAs. Also look at debit and credit card programs affiliated with the bank.

Now it's time to do a little bit of homework and legwork. First, go online and search for the banks nearby that fulfill most of your criteria. Searching for banks in your town is a good way to start. It will take a little bit of time, but will be worth the effort.

A good method is to list the different banks you're considering with your must-have checklist alongside and see which ones fulfill the majority of your needs. There may be one standout or several, so you may need to narrow down the list further. If interest rates are important to you, compare online to find the best interest rates.

The next step is to plan a bank visit for your handful of prospects. Be prepared to sit with a bank representative as the person tries to convince you that this bank is the perfect fit. Come prepared with a list of questions and concerns, and try to direct the conversation as to what is important to you and ask about the biggest benefits of banking with this financial institution. Take copious notes and all the pamphlets and materials that will be offered to you.

Finally, go home and analyze the materials and information for each bank to determine which one is for you. There may be subtle differences that make the choice more difficult, so to help make the final decision you may want to ask family, friends and neighbors which bank they use and if they are satisfied customers.

Making the switch

Once you decide on a new bank, there are a number of considerations when making the switch.

First, decide which accounts, investment options, credit/debit cards and other features you will be utilizing. Figure out how much money you will be designating to each account.

Then, before opening these accounts with your new bank, see what assistance it offers. Some banks will do a lot of work for you, which is a great bonus, since there are many variables to consider when closing and opening accounts.

Before opening the new account, examine old bank statements and create a list of all automatic billing and direct deposits for your old account. This should include account numbers and the dates for the next anticipated transactions.

The next step involves withdrawing money to open and fund your new bank accounts. Immediately order checks, debit and credit cards so you can be up and running as soon as possible.

If you have automatic bill pay, be sure to time it correctly or leave enough money in the account for bills or payments that either haven't cleared or will be withdrawn within the week.

Only after your new accounts are fully funded should you switch direct deposits and automatic payments to the new bank. It's important to be thorough about all automatic transactions linked to your former bank account to make sure you don't bounce checks or get hit with insufficient fund fees.

Don't forget to switch over insurance payments, mortgage payments, doctor/dentist payments, home equity loans, club memberships and automatic renewals, for example. Also, update checking account links for other online accounts, such as PayPal and Amazon.

It's best to hold off closing your old accounts completely until all outstanding checks and automatic payments have cleared. Experts recommend waiting at least 30 days after switching to the new bank before completely closing your old accounts.

By taking your time and being thorough, the bank switch can be a painless process. It's important to cover all of your bases to ensure the next bank will be your last.

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