August 06, 2020
Maybe your bank has been frustrating you with fees for years or maybe you’ve heard about the benefits credit unions can offer — whatever your reasons, you’re interested in making a switch. It may seem daunting to make a change in your financial institution, but it’s not as hard as you think. It does take time to make the switch from a bank to a credit union, but with a bit of patience you can leave your bank behind.
Follow these steps to make your switch as quick and hassle-free as possible.
1. Find your credit union. Not just anyone can join any credit union. Each credit union serves a different subset of people, or field of membership, that might be based on geographic location, membership in a specific group, or employment. That might make credit unions sound exclusive, but most credit unions will let you join if you have an eligible family member or you make a donation to a related charity. Start your search with the NCUA’s Credit Union Locator.
2. Do your research. Once you’ve found a credit union, and you’re interested in joining, you’ll want to do your homework to make sure it’s a good match. Look into their rates and fees to make sure the switch makes financial sense. You’ll want to take a close look at how you’ll be doing your banking, too. Check out where your credit union of choice has branch offices and fee-free ATMs, as well as online banking options to be sure that the credit union will meet your needs. Deposit insurance is also important. Federally-chartered credit unions will be insured by the Nation Credit Union Share Insurance Fund (NCUIF) for accounts up to $250,000, while state-chartered credit unions may be privately insured — either way, you’ll want to know before you sign up.
3. Open your new account. Talk to your credit union about starting a new account that suits your needs — online, on the phone, or in person — and ask if they have a “switch kit.” Many credit unions will have some kind of switch kit, which contains all of the information you need to transfer direct deposits, set up bill pay, and other essential things you’re likely to need when switching financial institutions. When you open your account, you’ll want to put enough cash in to reach any minimum required balance and avoid fees, but don’t pull all of your money out of your old account just yet.
4. Make sure payments are going to your new account. Many individuals are paid by direct deposit, and one of your first steps should be to transfer any existing direct deposits you have to your new account. Chances are you’ll need to speak to your employer, or anyone else paying you, to make sure your cash is directed to the right account.
5. Change automatic payments. Most of us use online bill payments or have plenty of subscription services and store accounts tied to our debit or credit cards. When you switch your financial institution, you’ll have to go through the tedious process of setting up automatic bill payments and updating credit card numbers to reflect your new account. Also remember any person-to-person payment platforms you use, such as Venmo or Paypal. These are likely tied to your bank account if you use them frequently. Take care with this step, as any charges directed at your old account can complicate the switching process.
6. Close your old account. You’ll want to be sure all transactions, especially checks, have cleared before you take this last step. It’s not a bad idea to keep your old account open for as long as a month to make sure that no payments are still associated with the account. Once you’re sure there’s no money going to or from the account, you’ll want to call your financial institution to find out what’s required to close the account. Chances are you’ll have to go into a branch office and fill out some paperwork — and your bank will probably try to convince you to stay but remember that you’re switching for a reason. Stand firm and enjoy your new, lower-fee life!