How To Switch Savings Accounts Securely

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admin August 17, 2023
Updated 2023/08/17 at 2:41 PM
How To Switch Savings Accounts Securely

Saving money is important, and it doesn’t have to be a hassle. A savings account allows you to put away money for a future purchase without having to worry about monthly maintenance fees or minimum balance requirements. 

Your savings account is ideal for your short-term goals. It will put money away for you, earn interest over time, and be there when you need it.

A savings account is a convenient place to securely store your money while earning interest. 

You can easily withdraw funds whenever you need them and never worry about minimum balance requirements or monthly maintenance fees. 

On top of that, many savings accounts allow for free or low-cost overdraft protection. All in all, it’s the perfect destination for your short-term financial goals.

A savings account allows you to earn interest while being able to access your money at any time. You should consider opening a savings account if you want to grow your money, need easy access to cash, or want a safe place for emergency funds. 

Having a savings account can help you reach important financial goals and is a good place for your liquid cash. It is a basic, secure place to grow your money, with no annual fees. It also provides easy access to your funds if needed. 

Combined with a checking account, it’s a versatile tool for taking charge of your finances. Start saving for what matters. 

You can create a saving account in an online bank, credit union, or traditional banking institution. A personal savings account can pay an Annual Percentage Yield (APY) on charge fees and deposits — two top factors to put into consideration when looking to switch into a new savings account.

FDIC coverage insures savings accounts with up to $250,000 in savings per depositors, financial institution, and per account ownership, So you can be confident about the safety of your money even when your bank fails.

If you plan on switching banks for whatever reason best known to you, there is some simple planning and moves to select the right savings account. You’ll likely enjoy better services, opportunities, reduced fees, and interest rates when you switch to a better bank service.

Fees

Fees are key revenue generators for banks. They charge fees on savings accounts and other services and products they provide.

Although fees might seem like a small factor in choosing savings accounts, they can add up and make a dent in the amount you’ve saved. Make sure to read the terms of each savings account you’re considering to find out what kind of fees they charge, so you can choose one that’s best for your needs.

Fees can also turn you off from opening a savings account, but they don’t have to be a deal-breaker. Just look at the fee schedule before opening an account to know what to expect. Also, some banks offer interest rate promotions and waivers on these fees. It’s always good to ask.

Some of the popular fees you’ll come across include:

  • Paper statement fee
  • Wire transfer fee
  • Monthly maintenance fee
  • Inactivity fee
  • Excess withdrawal fee
  • Deposited item return fee
  • Paper statement fee

Annual Percentage Yield (APY)

APY, or annual percentage yield, is a way of showing the interest rate that you could earn on a savings account over a year. It’s larger than the basic interest rate because it accounts for compounding. 

This means you could earn interest on your interest while you save. Comparing APYs on different savings accounts can help you determine which one may help your money grow faster.APY, or annual percentage yield, shows you what your money could earn in a year. 

The comparison across savings accounts can help you decide which one may help your money grow faster. 

You can factor in the basic interest rate, as well as any potential compounding interest your money could earn over the course of a year. When comparing savings accounts, look beyond the advertised interest rate and ask about APY. It’s a better indicator of what your balance could earn in a year.

Probably the most important thing to know about a savings account is that it accumulates interest. That’s where the Annual Percentage Yield comes in. It lets you quickly compare accounts with different rates, fees, and compounding periods.

As a general rule of thumb, online banks provide customers with higher APY on their savings accounts compared to brick-and-mortar banks. So, you should consider interest rates across different banks.

Initial Deposit

While considering a new savings account, there is probably some amount you are considering as an initial deposit. Banks have their minimum initial deposit that you must make while opening a savings account, and this amount varies from bank to bank.

For instance, a bank may request an initial deposit of $500 while another bank may not demand any amount as an initial deposit. A higher minimum deposit may be necessary for certain savings accounts that offer a higher APY.

Consider You Convenience and Customer Support

Your savings account is supposed to help you retain funds to achieve long-term goals or to keep away money you do not need for everyday expenses. However, you must know how you can easily access your money when it is important to.

It is first of all important to understand your personal needs when comparing the services savings accounts offer. These questions are also crucial to consider:

 

  • What type of customer support do they have?

 

  • Will the account be accompanied by a debit card or an ATM card?

 

  • Are there branches or ATMs where I can also deposit money?

 

  • Are there daily, weekly or monthly limits on the amount or number of deposits and withdrawals?

 

  • Does the bank have provisions for mobile apps or online banking?

 

  • Is mobile check deposit an option? 

 

  • Will I be able to set up a direct deposit or transfer money between accounts?

 

Every bank with their different terms and conditions for creating a savings account. You’ll be able to choose the most suitable for you when you review how these banks connect with their customers, and how you can connect with your account.

Other Products and Services

Switching savings accounts is about more than just finding the right interest rate. You want to make sure your money will be accessible whenever you need it. 

Compare banks that offer savings based on your personal needs and goals, such as opening an account with a higher minimum balance to receive higher interest rates, or finding a checking account that doesn’t require direct deposit. As you update your savings account, think of what else you can do while you’re at it.

Savings accounts are just one of many types of financial accounts, and these account options can be used differently to help you make the most of your money. So, while comparing banks, also consider other services and products that can also meet your other financial needs.

Some products or services to consider include, savings accounts, checking accounts, personal loans, money market accounts, credit cards, certificate of deposit account, car loans, student loans, mortgage loans, business loans, wealth management services, insurance, and retirement and investment accounts.

Using one bank for multiple products or services has the advantage of convenience as your accounts are held at one location. 

When it comes to switching banks, the most important thing is finding a bank that will help you reach your financial goals. Perhaps you have short-term goals like saving for holiday gifts; or some long-term goals such as buying a home. There are many great options, so explore your options and decide what is best for you. 

How To Open a Savings Account With a New Bank

To open a new savings account that fits your new goals, these few steps will help set up your account.

Apply for the New Savings Account

To open a new savings account is easy in most banks. All you need to do is to complete an application form where you’ll reveal some basic details about yourself. This could either be online or onsite.

Some of the basic information that would be required include:

  • Name
  • Address
  • Date of birth
  • Phone number
  • Social Security number
  • Email number

For someone opening a joint savings account, you’ll need to provide some basic info such as a copy of a government-issued ID for identity verification and you may be subject to a ChexSystems check. 

ChexSystems is an agency that curates and reports consumer data that are connected to negative activity for bank accounts, which may include unpaid overdrafts or bounced checks.

Next, is to fund your new account.

Fund Your New Account

Most banks will approve your new savings account almost instantly. Once you have that done, fund it.

You can find the account via direct deposit, ATM, or mobile banking, depending on what works in the bank. If it is via an online bank, you’ll need to provide a routing number and account number where you’ll be transferring funds from into your new account. This would allow your new bank to schedule an ACH transfer to direct your money from your old account into the new one.

For a physical bank, you can make an initial deposit simply via check or cash payment.

From the process of applying for your new savings account and finally switching is not likely to take more than one or two days. But the final documents or ATM cards may not be ready until about five business days.

Transferring Funds and Closing the Old Account

To transfer your money into your new account is dependent on where your new savings account is open and what works there.

ACH Transfer

With an ACH transfer, you can move your entire balance from your savings account with your old bank into the new. To do this, simply link the accounts and then, schedule the transfer.

Check Transfer

If you’re moving money, you could transfer funds from your old savings account to a new one through a certified check, especially if you are moving between banks or credit unions.

Simply visit the bank and request a certified check for what you need for your withdrawal. You may receive a check that you’ll be charged for.

You could then deposit the check into your new bank account.

Reroute Automatic Transactions

In case you want a final closure of your old account, then all your money there, including automatic transactions would have to be moved into the new one. That may include:

  • Automatic bill payments
  • Direct deposit of your paychecks
  • Direct deposit of government benefits or tax refunds
  • Recurring deposits from a checking account

For bank alerts that you have already set up in your previous account, you may want to set them up again with the new bank you are moving to. Most banks will have online banking services that will make this easy.

Ensure to receive all your automatic deposits and payments transferred over. New transactions that post to your old account generate overdraft fees if you don’t have money left to cover the activity.

Close The Old Account

After you have transferred all your recurring payments or deposits from your old savings account, you can notify the bank to close the account. However, you may want to consider leaving the old account active for a few days to see if you have automatic transactions which you may have missed.

Call your bank to finalize the process of account closure. Request a written verification to show that it has been closed. When this is done, note that you’ll also not be able to use online banking or mobile apps on that account again.

 

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