Five Steps for Changing Your Checking AccountOver the weekend, we heard from more than 1,300 DailyFinance readers who said they're considering switching banks in light of increased fees at some of the nation's largest financial institutions. As consumers, we do an increasing amount of our personal banking with debit cards, and many of us have an elaborate system of direct deposits and automated payments in place. So if your savings margin is thin, switching banks requires some forethought and planning to ensure that you are not placing yourself at risk of an overdraft while you migrate your account. Richard Barrington, a personal finance expert for MoneyRates.com, shared his expertise with this five-step process on how to handle a bank swap.

1. Find the right bank or credit union for you. The financial institution that works best for your brother may not be the best one for you, so do your own research. It comes down to a matrix of three things for each customer, says Barrington: services, fees and locations.

Ask yourself: How do I use my bank? Do I use a debit card and ATMs? Do I prefer mobile banking and online transactions, or do I prefer paper checks and statements? Is international access important to me? If you're moving a checking and savings account together, compare the interest rate earned on the savings account with the service charges on the checking account.

"You want to closely scrutinize the the fee structure," he says. "Start with the monthly maintenance fees." Take this example from Personal Finance for Dummies: If you plan to keep $2,000 in a savings account and earn 2% interest, you will earn $40 in interest over a year. Meanwhile, your checking account charges a monthly $9 fee (or $108 a year) for a low balance. Would that extra $2,000 bump your checking account balance above the requirement and cancel out the monthly fee? Calculate if you can avoid a higher fee in place of smaller earnings. (Note: This strategy only works if you can resist spending that extra money when it's sitting in your checking account.)

Also, take a look at this primer on how to choose the right bank. Other online tools, including Google Adviser, MoneyRates.com and Bankrate.com, offer easy side-by-side comparisons of checking account services or find a credit union.

2. Open a new account, but leave the old one open. Create overlap between the accounts to make sure bills get paid while the new account starts to build a capital reserve. It may be useful to create an inventory or calendar of all the automatic credits and debits to the account to plan when to start moving the money. Barrington recommends leaving a statement cycle's worth of overlap in the old account.

3. Shift your direct deposits to the new account. The next move is to redirect any direct deposits, like your paycheck, into your new account. This requires speaking to your employer's payroll department -- or whichever part of the organization handles your checks -- and giving them your new account information. Wait a pay cycle before taking the next step.

4. Move all the automatic payments. Contact the organizations doing direct billing and advise them of your new bank account. This could also be an opportunity to reschedule payments so that they are evenly spread through out the month, rather than in the first half. Another strategy for credit-card holders is to use a dedicated credit card to pay monthly bills, then pay that sum in full from the checking account.

5. Write a letter to the old bank to close the account. Emptying your old account of all the money doesn't close it automatically. Even worse, you could get maintenance fees on that zero-balance account, which could land you with overdraft fees. So, write an old-fashioned letter to your ex-bank specifying the date the account is to be officially shut down.

Catherine New is a staff writer with DailyFinance. You can reach her at catherine.new@huffingtonpost.com.

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Jensen Mott

Great information. I have been learning strategies like this in my finance class, but I am glad you condensed it down into five items. I look forward to reading more of your tips! Do you post a lot about finance?
Jensen | http://citizensstatebankindiana.com/about/history/

January 29 2014 at 3:13 PM Report abuse rate up rate down Reply
jmw26red

OMG I am so tired of these AOL articles that decidedly bash the big banks. I work for a big giant one and am not a big wig but I enjoy getting a paycheck that puts a roof over my head and allows me to live a modest life. Being in the trenches everyday, so to speak, I see clients everyday that are happy with who we are and what we do. Granted we all (credit unions too) have their issues but its not like we are all a bunch of greedy mofo's sitting at a desk thinking up ways to screw you over (which AOL and Huffington Post would have you believe). Because trust me, the average consumer is stupid enough to do it all their own without any help from us. Having been in this industry for ten years now, I have seen people do some of the dumbest stuff and lie to us bankers and take US to the cleaners, spending money they don't have and abandoning their debt. I can't even begin to tell you how many clients have charged off their accounts and owe banks hundreds or thousands.. With as much debt as we charge off, its no wonder there are fees for everything. I could go on with this diatribe for hours but let me tell you, the average credit union is targeting you as a customer just like the big banks are, trying to compete just as much, but don't want to be called one lest they fall in the same category...I'm sure many will have opinions to this but like the popular saying, there are two sides to every story..

See full article from DailyFinance: http://srph.it/nrkbcD

October 04 2011 at 11:24 PM Report abuse -1 rate up rate down Reply
1 reply to jmw26red's comment
Joe Peters

Yeah, my heart doesnt bledd for you one bit. Find a less sketchy line of work than Big Banking.

You obviously hate what you are doing,yet no one is forcing you to do it.

April 09 2012 at 8:27 PM Report abuse rate up rate down Reply
savemycountry911

Join a Credit Union.

October 04 2011 at 2:24 PM Report abuse +1 rate up rate down Reply
1 reply to savemycountry911's comment
Joe Peters

That's what I did. I like it better than my local Skank of America.

April 09 2012 at 8:28 PM Report abuse rate up rate down Reply
BOB G DANIELS

Wells-Fargo will start charging $20.00 a month on accounts below $1000.00. The fee will be waved for those with a direct deposit.
Although I not be affected, I wrote a blistering letter to the dud whot sent the letter out, telling him his bank was selfish and a bunch of other things including threating to pull my money out and put it in my other bank. Everyone with this bank should do the same thing I did. They need us; we don't need them!
Bob G. Daniels

October 04 2011 at 2:22 PM Report abuse rate up rate down Reply
John M

Dump Bank of America. When the fraud catches up with them it will close them down. Maybe some jail time for the top cheaters.

October 04 2011 at 12:00 PM Report abuse +2 rate up rate down Reply
John M

Dump Bank of America before all the fraud lawsuits catch up.

October 04 2011 at 11:59 AM Report abuse +1 rate up rate down Reply
Morris Cantonitis

Satan has a 1 step plan for the REd Plague, US Wall Alley PIGGS , FED Reserve and SEC CORRUPT PIGGS.

NYC GETS NUKED.

October 04 2011 at 10:21 AM Report abuse -3 rate up rate down Reply
jrthomson

Well, I was going to comment on closing my bank account after 27 years, but I see I'm apparently in the wrong space. Is this the Republican/Democrat debate room?

October 04 2011 at 7:42 AM Report abuse +1 rate up rate down Reply
michelebachmann8

FOLKS, IF YOU WANT TO REPEAL THE 20TH CENTURY VOTE FOR ME!!!!!!!........HAPPY BIRTHDAY ELVIS!!!!!!!

October 03 2011 at 11:42 PM Report abuse rate up rate down Reply
democracks0

I WAS ABOUT TO GET ON A TRAIN WHEN SOMEONE TOLD ME IT WAS GOING TO BE GOING DOWN THE WRONG TRACK. I SAID OH THAT MUST BE THE OBAMA TRAIN.

October 03 2011 at 11:28 PM Report abuse -2 rate up rate down Reply
1 reply to democracks0's comment
tutularu

glad you stayed off...now get on the loser train! bye

October 04 2011 at 11:25 AM Report abuse rate up rate down Reply