Two key features to look for in a new savings account include the interest paid on your money and the fees. If you’re ready to switch banks and move your money to another savings account, it’s important to compare your options to find the right fit for you.
How To Switch a Savings Account to a New Bank
A savings account is a deposit account that’s designed to safely hold the money you don’t plan to spend right away. A savings account is an ideal place to securely store your money while earning interest. For many people, a savings account is one of their first bank accounts and can be a building block for good financial health. There are a few key steps you’ll need to complete to open your new savings account, transfer the money from your old savings account to your new account, and close the existing account.
Apply for a New Savings Account
Many banks make it easy to open a new savings account just by completing an application and giving the bank some basic information. You can usually complete an application online or in a branch location. You’ll likely need to provide personal information like your:
NameAddressDate of birthSocial Security numberPhone numberEmail address
If you’re opening a joint savings account with someone, you’ll also need to provide their information. The bank may ask you to upload a copy of a government-issued ID to verify your identity and you may be subject to a ChexSystems check. ChexSystems is a consumer reporting agency that collects data relating to negative activity for bank accounts, such as bounced checks or unpaid overdrafts. Opening a new savings account typically doesn’t trigger a hard credit check, which would negatively impact your credit temporarily.
Transfer Money From the Old to the New Account
Once your new savings account is open, which may be instantaneous if you’re applying online, you’ll need to fund the account with an initial deposit. If you’re opening a savings account in person, you may be able to make your initial deposit with cash or a check. However, transferring the money from the old account to the new account can be done in a few different ways. ACH Transfer If you opened a new savings account, you could move your entire balance from your old savings account via an Automated Clearing House transfer (ACH). To do this, you’d have to link the accounts first, then schedule the transfer from your original savings account to your new account. Check Transfer You could transfer funds from your old savings account to your new one using a certified check if you’re moving money between traditional banks or credit unions. You’d need to visit the branch and request a certified check for the withdrawal amount, but you’ll likely be charged a fee. From there, you could deposit the check into your new savings account in person or mail it. Reroute Automatic Transactions If you plan to close your old savings account, you’ll want to transfer over any automatic transactions to your new account, which may include:
Direct deposit of your paychecksDirect deposit of government benefits or tax refundsAutomatic bill paymentsRecurring deposits from a checking account
If you had banking alerts set up with your old account, you’ll need to establish them with your new bank, which should be possible through the bank’s online platform or mobile app. It’s important to transfer all of your automatic deposits and payments over to the new bank account because if you don’t, new transactions on the old account could trigger an overdraft if there are insufficient funds, triggering an overdraft fee.
Close the Old Account
Once you’ve transferred over all deposits or recurring payments from your old savings account, you can ask the bank to close it. Although you may want to keep your old account open for a few months to monitor it for any automatic transactions you may have missed. However, be mindful of fees with the old account if you keep it open. If there’s a minimum balance requirement to avoid a fee and you transferred your money to the new account, you may get charged a monthly fee on the old account.
What To Look for in a New Savings Account
Switching banks is relatively painless, but it takes some planning and careful consideration to find the right savings account for you. Moving to a new savings account could pay off with lower fees, a higher interest rate, or better service. You can open a savings account at traditional banks, credit unions, and online banking institutions.
Fees
Banks make money by charging fees for their products and services and savings accounts are no exception. Higher fees can detract from the money you’re saving. So check the fee schedule for each savings account you’re considering to estimate how much you might pay. The kinds of fees a savings account may charge include:
Monthly maintenance feeExcess withdrawal feePaper statement feeDeposited item return feeInactivity feeWire transfer fee
Monthly maintenance fees are fees you pay simply for having the account. An excess withdrawal fee may apply when you exceed the allowed limit for withdrawals from savings per month. For example, your bank may set a limit of six withdrawals per month and charge you $5 if you go over the limit.
APY
APY or annual percentage yield reflects the amount of interest you could earn on a savings account balance over the course of a year. The APY is larger than the basic interest rate because it accounts for compounding, which means you earn interest on your interest. Comparing APYs will help determine which savings account earns you more money. While a higher APY is a benefit, it’s important to understand how it’s applied. Some banks may apply the same APY across all balances. So you might earn 0.01% on all your deposits. Other banks may tier your APY based on your balance. So you might earn 0.05% on the first $2,499 in savings, then earn 0.60% on everything you save above $2,500.
Initial Deposit
If you’re opening a savings account, the amount needed to open the account can vary from bank to bank. For instance, you may be able to open a new savings account with no money at one bank while another bank may require an initial deposit of $500. A higher minimum deposit may be required for savings accounts that offer a higher APY.
Convenience and Customer Service
A savings account is meant to hold money for longer-term goals, or money not needed for day-to-day expenses. Still, it’s important to consider how easily you’ll be able to access your money. If you expect you’ll need your funds after you deposit them, review the bank’s funds availability policy. Some helpful questions to ask when comparing banks and their savings accounts include:
Does the bank offer online banking or a mobile app?Is mobile check deposit an option? Will the account come with an ATM card or debit card?Will I be able to set up direct deposit or transfer money between accounts?Can I deposit money at a branch or ATM?Are there daily, weekly or monthly limits on the amount or number of deposits and withdrawals?What type of customer support is available?
Consider Other Products and Services
When searching for how to switch savings accounts, you may want to explore other financial products and services at the new bank. Some of these include:
Checking accounts Certificate of deposit accounts Money market accounts Credit cards Loans, including car, home mortgage, and personal loans Retirement accounts Wealth management services Insurance
Consolidating all of your banking products or services into one bank can be more convenient and help you secure better terms with your bank since you have more products with them.
