First Person: Changing Banks vs. Closing Bank Accounts

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Having moved regularly after graduating college -- and I'm talking on average about every 2 years for the past 12 years -- I have dealt with changing or closing bank accounts quite often. Over this time, there are certain things that I have learned to do regarding our various bank accounts that makes it easier and more organized when we have to switch or close them. While this process is never a fun one for us, developing and abiding by the following rules has certainly made it a simpler thing to do and has kept us from making possibly costly mistakes in the process.

Start Early

I like to get rolling on the process of changing or closing bank accounts well in advance to when I will actually be moving or need them "officially" closed. I do this so that I don't have to rush the process and since different banks can move at different speeds in making account adjustments. It also gives me time to get a new account or accounts open in advance to closing my old ones if necessary. This way I can order new checks, transfer money between accounts, get bill pay or money movement systems set up, and make similar moves. This also allows me some extra time for the next step.

Check on Checks

Depending upon what checks are outstanding, it could be weeks or longer before I'm actually able to completely close out a checking account. I don't want to zero out my balance only to realize after the fact that the account had an outstanding check that bounced and came back to haunt me in the form of an overdraft fee or worse. Therefore, I give myself time to make sure all checks have cleared, and I even wait a little longer if I'm able to do so in an effort to make sure that there are no other surprises coming before I close the account.

Remember to Change Information on Other Accounts

The sort of "surprise" to which I'm referring once came to my wife by way of an old checking account to which she had linked her toll road charge account. After moving, she had forgotten to update the information since it was a rare charge to top up her toll balance (usually once a year since we don't use the toll road that often). When the charge hit a debit card that was linked to an inactive account, we received a bill from the bank. Fortunately, we were in good standing with the bank in our new location and they ended up waiving the fee.

However, this was an important lesson in ensuring that whether by way of debit cards, automated bill pay, or through similar account links that we needed to ensure we had everything cleared and updated before closing out an old account.

Leave a Temporary Balance

This brings me to my last point on changing or closing bank accounts. I tend to leave a balance in those accounts for up to a month after moving the majority of the balance into a new account. This helps me avoid any unforeseen issues like that encountered by my wife and the toll road account situation. If something gets billed unexpectedly or a check I'd forgotten about suddenly clears, I have enough in the account to cover the balance of the transaction before I close it out for good. However, I never continue to spend from this account unless I'm going to keep it open, since that would largely negate the purpose of leaving cash in it to avoid unforeseen issues.

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