I recently embarked on a significant life change, moving from the Big Apple to the Big Easy. Anyone who has moved knows what a pain it is, and I would argue that the stress (both mental and financial) is greatly exacerbated if you move into or out of a big city.
For the most part, my move from New York City to New Orleans was pretty easy. Instead of holding on to my big valuables like my tufted headboard (my first big girl purchase) or my TV, I made the decision to sell those things and just ship my clothes and other small valuables and use Southwest’s two free bags. I have to say I patted myself on the back for being so financially smart with my move… or so I thought.
Fast forward two wonderful weeks in New Orleans, and I realized I needed to take some money to catch the bus home from work. To my dismay, that̵7;s when I found out that my beloved bank of seven years, Wells Fargo, was nowhere to be found. The closest place was in Mississippi.
Me: Not a big deal, right? There are plenty of banks in New Orleans and the online world makes everything easier!!
Universe: Wrong. Changing banks is actually not very easy.
After working at a tech startup for more than a year, I assumed that our banking system must have seamless capabilities for moving money around and went into this pretty much blind.
I’ll spare you the gory details, but I can say that the resulting situation was a bit of a mess revolving around fighting overdraft fees and all my money being tied up in a bank transfer for over a week. Not to mention the stress of not being able to “touch” my money. It’s a bit annoying – especially when you’ve just moved and need access to cash. But not everyone has been taught how to switch banks when you need to, but it’s also not something you think you need to know.
Since no one bestowed this wisdom on me, I would like to help the next changer (or bank changer) handle this situation properly.
Cancel all your automatic payments
With at least 30 days remaining, cancel all your automatic payments to and deposits from your current bank account. Think: the paycheck deposited from your job every two weeks, your car loan payment, student loan payment, cable bill, utility bill, etc.
The reason I say 30 days away is because this automatic payment can take time to process. And if not processed in time, the money will be removed from an empty account, which will result in overdraft fees, or deposited into an old account that you thought you just closed. The latter would be truly heartbreaking. More to come soon on that topic.
With me, I decided to transfer my money directly from the Wells Fargo account to my new Chase account. However, I was too late to receive the end date to cancel my automatic student loan payment. Therefore the money would 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 transferred was basically frozen for seven days (until it was posted). I couldn’t change the amount I sent to be $150 less because I didn’t want to make the process of depositing my money into Chase any slower than it already was.
Fortunately, my partner wrote me a check for the payment of my loan, which I deposited into my Wells Fargo account immediately upon realizing my mistake.
Consolidate your money
Some people may not agree with me on this, 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) transfer my money, I put everything into my checking account and once it was “booked” I closed my savings and Way-to-Save accounts. It was a bit of a pain because you can’t close the other accounts until the money is officially posted to your checking account. Took about a day.
Once I had everything in my new Chase account, I opened a savings account and paid it all out accordingly.
The reason I liked this option was because I only had to deal with one bank transfer instead of obsessively checking multiple transfers. Also, there can be fees associated with wire transfers (ugh), so this limits the amount of fees you pay for moving 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 so generous.
Research the type of account you want in advance
Just like opening a brand new account, you’ll want to decide what 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 direct deposit provisions (for the account to be free) or some kind of fancy account that had annual fees but “perks” like unlimited free (?!?) checking.
But if you hate being put on the spot, look at their site and find out what your options are. I went with the basic account, which was free because I get my wages directly deposited into my account. I’m not a financial planner, but I don’t know who would need one of those fancy free checking accounts — unless you like collecting craft checks.
For most banks, you can just go online and open an account. In hindsight, this is 100% what I should have done. However, I thought going in person would give me more hand holding on how to transfer my money quickly since I was in a pinch.
I was wrong…
If you are going into the bank, make an appointment
I’m kind of laughing that I even need to make this a point. As I mentioned above, I’m really bad at 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 making 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 did that too because I thought I could get cash right away 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 as well. I also left without cash.
If you want to go the personal route, call the bank you’re switching to, schedule an appointment, and ask them what you need to bring to seamlessly open a new account and get your money deposited quickly.
They will probably say:
- Two forms of ID
- A 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 big mistake on my part. As 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 charge **surprisingly** that I did not factor into my bank transfer amount. Again, Wells Fargo did me a solid and instead of charging me an overdraft fee AND this $3 fee, they forgave it from the account.
Write a check
This is important. While I was totally lucky to have a free bank transfer, it took a long time (a week with my money basically locked up!!) to get the money posted, and it really stressed me out. I compulsively checked my account every day to see if maybe it would be sent to my Chase account a couple of days early. Spoiler alert: it didn’t.
If I had a time machine, I would go back and write a check from my Wells Fargo account to my new Chase account for the exact amount that I had consolidated into my checking account. As you know it only takes a couple of days to post checks.
Get money (!)
I know this may seem like “duh” advice, but we have become so dependent on our credit 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 being strapped for cash and having to pay an out-of-network bank and my bank fees to withdraw MY money.
If you know you’ll be switching banks and moving, shell out a couple hundred dollars to tide 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, as I mentioned above, once you choose an amount to transfer, you’re married to that amount so you can’t just withdraw $20 here or there.
If you’re in the process of switching banks, you probably already know that it’s not the easiest thing to do. Let this checklist guide you on how to switch banks:
30 days before switching banks:
- Cancel all direct deposits and automatic payments from old bank accounts
At least two weeks left:
- Research the type of account(s) you need to open
- Open your new bank account ONLINE
- Collect your money in an account
- Get paid to stay for a week
- Have a blank check handy whether you choose to open your new bank account in person or online
- If you want to open an account in person, make an appointment
- Move without checking if you have plenty of access to your current bank in a new city 🙁
- Don’t make a bank transfer unless you’re comfortable with not having access to your money for a week and you’re okay with potential transfer fees
While I eventually managed to close my old bank accounts, avoid bank fees and start over with a new financial institution, I know without a doubt that I didn’t plan properly or take the easy way out.
Now it’s your turn. Pass this wisdom on.
Do you have a friend or family member who will be moving sometime soon? Ask them if their existing bank is in their new city. That simple question will set the wheels turning if they need to go through the bank switching process.