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A Field Guide to Closing Your Bank Account


Bank Transfer Day is gaining some serious steam. Although it's not technically affiliated with Occupy, it's being embraced by the movement and is the first specific call to action since the Occupy protests began four weeks ago.

The description and goal of Bank Transfer Day is straightforward: If you currently have checking and savings accounts (deposit accounts) with a big bank, the organizers encourage you to remove all of your funds, close your accounts, and place your money in a new deposit account with a not-for-profit credit union. The organizers ask that you do this by November 5. And since November 5 is a Saturday, you should definitely do it before November 5 since many big banks aren't open on weekends.

Bank Transfer Day can significantly impact the way banks are able to make a profit. In simplest terms, banks rely on our deposit account balances to make loans that net substantial profits. Without our deposits, banks can't make loans. And if banks can't make loans, they're going to take notice. And they're surely going to freak out.

So if you currently have a deposit account with a big bank and you want to participate in Bank Transfer Day, read the following steps. It's a field guide that will help you accomplish this meaningful task of shifting your money from corporations that serve the 1% and put it with an organization that cares about the remaining 99%.

What You Need To Do Before Walking Into Your Big Bank Branch

1. Go through previous big bank statements to see exactly which accounts you have. Be sure to check the names on each account. If you are closing a joint account with two holders, it makes a difference whether the word joining your names is "and" or "or." If the account in your name is in your name and someone else's, you will both need to go in and close the account. If the account is in your name or someone else's, either of you can close the account. Some big banks may vary on this policy, so it's best to call your big bank to find out exactly what you need to do prior to walking into your local branch.
 
2. If you have any loans with a big bank, look closely at your statements and paperwork you signed at the time of closing. There very well might be penalties that will trigger a higher interest rate if you close your checking account. Big banks excel at offering customers lower interest rates on mortgage and auto loans if you open a checking account and maintain a minimum balance. A primary checking account is a bank's ultimate goal to securing your, ahem, loyalty. A primary checking account also leads to, on average, the opening of three additional accounts with that financial institution. Decide whether or not you can or have the willingness to pay off the outstanding loan balance. If you do not pay off the loan balance, call your bank to ask about escalating fees or rate increases by closing your checking account before walking into your local branch to close the checking account.

3. Stop using your deposit accounts ASAP. You need to allow everything to clear the accounts completely before you close them. This clearing process takes about two weeks to complete. Keep close tabs online to see which transactions are still outstanding.

4. Research non-profit credit unions. You will need a place to deposit your money, so perform this research before closing your big bank accounts. A good resource for finding credit unions is Find A Credit Union. Make your decision on which non-profit credit union you will join before walking in to the big bank branch to close your deposit accounts.

What To Do When You Walk Into Your Big Bank Branch

1. Approach a branch teller and tell him/her that you would like to close your accounts. The teller might hand you off to a customer service representative due to the bank's account opening and closing protocol. Or the teller might hand you off because they don't want to tie up customers' wait time in the teller line.

2. If the bank employee asks why you are closing your account, decide in advance the reason you're going to provide. You can tell them you're unhappy with big banks. You can tell them you're a part of the 99%. Or you can decline to give them a reason. The most important thing is to remain focused and not do anything imprudent that will keep you from accomplishing your goal of closing your deposit accounts and walking out of the big bank branch with your money.

3. Once the account closing process begins, ask the bank employee if you have any cash reserve accounts tied to your deposit accounts. It doesn't make sense to keep a line of credit open that was tied to your soon-to-be closed account.  

4. The bank employee will ask if you would like to receive your money in the form of a check or cash. If you want to make it rain outside of the big bank branch, request to receive cash. If you don't want to make it rain, we advise you to request a check.

5. The bank employee will either give you a confirmation letter of your accounts being closed or they will mail it to you. Once you receive the letter, keep it on file for up to five years.

6. Walk out of the big bank branch.

What To Do After You Have Closed Your Big Bank Deposit Accounts

1. Shred all remaining checks and debit cards. This is an essential step. If you mistakenly use the checks or debit cards, you will be going back to the big bank branch. Except this time it will be to clean up your mess.

2. Go to the non-for-profit credit union you selected prior to closing your deposit accounts at the big bank. Open the accounts, get a new checkbook and debit card, shake the employee's hand, maybe give him/her a hug.

3. Sync up your new deposit account information (ABA routing number and account number for checks, card number, expiration date, 3-digit security code for debit card) to any relevant accounts that require automatic payments. For example, if you automatically pay your car insurance on a monthly basis with your checking account, be sure to sync up your checking account with your car insurance company. You may also want provide your new account information for online products such as iTunes, eBay, and PayPal.

4. Stand in front of a full-length mirror. Admire yourself. You've earned it.

That's all there is to it. Sounds like a lot and perhaps it is. After all, big banks played a role in making this process difficult because it acts as a deterrent for people to withdraw their money and close their accounts. But if you stick to this guide and remain focused on your goal, you can impact meaningful and measurable change by participating in Bank Transfer Day.

More resources for Bank Transfer Day:
Facebook: http://facebook.com/nov.fifth
Twitter: http://twitter.com/banktransferday
Twitter Hashtag: #louderthanwords
Email: info@banktransferday.org

 

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Reader Comments (80)

Hi,

I find this very interesting, but i don't know any non-financial credit institution in Europe, can someone help?

Cheers

Joao

October 12, 2011 | Unregistered Commenterjoao geada

Full disclosure, my father is COO of a Community Bank in South Florida. I'd suggest Community Banks as another option. They didn't receive bail out funds and hold nearly no home mortgages. They are owned and operated out of the local community they serve and do not have headquarters elsewhere. They don't charge for debit cards and still have all the online services as well as debit/credit through Visa/MC, so finding compatible ATM's aren't a problem.

Also, Credit Unions do NOT pay federal income taxes of any kind. All banks do. That means they do not help to pay for roads, police, military or anything else your tax dollar pays.

October 12, 2011 | Unregistered CommenterJoe

Credit Unions are "Not-For-Profit" not "NON-PROFIT". There is a difference, and it is a BIG one!

October 12, 2011 | Unregistered CommenterJo

Is there any reason one would NOT open a new account with a Credit Union BEFORE cancelling the old account?

October 12, 2011 | Unregistered Commenterbluebluesdancer

Right: many of us who use "big banks" do so because they offer services that credit unions do not. Is it not sufficient to belong to a bank that didn't receive bail out money? Or received it and payed it back?

I don't understand when/how "big banks" became evil in and of themselves.

October 12, 2011 | Unregistered CommenterMother PeePee

@bluebluesdancer: A couple of reasons. One might be the minimum balance required to open an account at some credit unions. The second would be to save yourself an extra trip. However, it is perfectly acceptable to reverse the order you do these in, especially if you're concerned about your ability to open the new one, i.e. bad credit.

October 12, 2011 | Unregistered CommenterLironah

Also a good idea would be to close your big bank credit cards.

October 12, 2011 | Unregistered Commenterimaaron

Be prepared for the big banks to try to talk you into staying, and to make it not easy for you to close your account. My bank told me, "we have to wait for some charges to clear" which I discovered was BS once I was able to check for myself.

I have also had trouble getting big banks to honor cashiers checks that they issued. Keep this in mind if you accept a cashiers check while planning to cash it at another branch of the bank.

Also check with your target credit union or community bank, to make sure they can handle any electronic transactions that you might normally use: direct deposits, PayPal, Amazon payments, etc.

You may or may not want to consider that any transaction of more than $10,000.00 will be reported to the U.S. govt.

Closing our big bank accounts is a very effective way to make a statement; please do it.

October 12, 2011 | Unregistered CommenterLeila

Closing your credit lines, as suggested in this article, will often negatively impact your credit rating.

October 12, 2011 | Unregistered CommenterCasey

Nice step by step guide.

But where's your list of big, evil banks? Which ones are the worst? Does anyone have a ranking of banks to share?

As for alternatives, credit unions won't work for everyone.

What about local banks that could really use our business?

And what about online banks such as ING and Ally? Are they better? More resources, please.

October 12, 2011 | Unregistered Commenterelsa

You have to stop with this credit union nonsense. Look closer and you will see that credit unions have been just as bad AND just as good as any other bank. Such generalizations really does hurt your case and make you sound like an uninformed blogger who is just riding the wave for the purpose of creating sensationalism. When you make blanket statements about the goodness of credit unions at the expense of community banks, it really makes me think twice about the soundness of your arguments.

So go find a financial institution (community bank or credit union) that meets your needs (pricing, products, services, etc.) and switch to that organization. With nearly 8,000 banks and an equally large number of credit unions, it should not be too difficult to find a good match that will respect you as a client and meet your needs.

Jesse Torres
President and CEO
Pan American Bank
East Los Angeles, CA
"California's Oldest Latino-Owned Bank"
http://www.PanAmericanBank.us

October 12, 2011 | Unregistered CommenterJesse Torres

I wrote a large post about this process as well. My position is overlook credit unions as well. While they are slightly better than banks, they have their own set of crap to nail you with.

Imagine this: Depositing checks just by taking a picture of them on your iPhone or Droid.

Imagine this: Any ATM fee you may encounter, anywhere, for any amount, reimbursed to you at the end of the month.

Imagine this: No account minimums.

Imagine this: No monthly service charges.

Imagine this: Free online bill pay and standard checks.

Imagine this: Competitive interest rates on your deposited money.

Imagine this: FDIC Insured up to $250,000.

Sound crazy? Sound too good to be true?

Welcome to Schwab Country.

GO TO SCHWAB.COM HIGH-YIELD CHECKING PAGE

October 12, 2011 | Unregistered CommenterGarry

Kasasa rewards checking accounts are the best deal by far:

https://www.kasasa.com/explore

THey link you to a credit union or community bank. You can earn up to 4% interest on your checking account, and get refunded for atm fees.

I switched to COnsumers: https://www.myconsumers.org/

October 12, 2011 | Unregistered CommenterJustin

@Garry - So instead of paying BoA's $5 monthly fee for debit card use, you would rather I join Charles Schwab and have THEM pay BoA's "out of network" fee for withdrawing money from the ATM? Seems counterproductive.

October 12, 2011 | Unregistered CommenterJeremy Silver

I think you need to get a new account opened before closing your existing one. You will need an account for your paycheck or direct deposit. You will need to have the ATM card and checks available. Also, don't forget to stop any automatic transfers or direct deposits!

October 12, 2011 | Unregistered CommenterJean

If seems like you audience is a bunch of people who don't know much about the banking system which are the same people who complain about their accounts in the first place. I don't make a lot of money but I KNOW HOW TO MANAGE MY ACCOUNT, and I haven't had a complaint about my big predatory bank.

October 13, 2011 | Unregistered CommenterPedro

Why is there no mention of ethical banks?
@Joao, in Europe, I am switching to TrioDos, a transparent bank. It finances environmental, sustainable and socially viable projects.It started in the Netherlands and is now in many countries around Europe. Check it out!
They must have something equivalent in the U.S>
The returns are not as good as big banks but at least they are socially responsible. Only sharing will save the world....

October 13, 2011 | Unregistered CommenterSeraf

An added twist - Each bank client leaving his/her bank should short the banks common stock. Or,if they are long the stock,dump it then go short.

October 13, 2011 | Unregistered CommenterJeff Robinson

Dumb.

October 13, 2011 | Unregistered CommenterMike

@Joe I agree with many of the points you make about community banks. However, some of us at FearLess have first-hand experience with banks that started out as "community banks" that are indeed headquartered far away from Wall Street. But they still went through aggressive M&A's and eventually became publicly-traded on the NASDAQ. My point is that "community banks" is a very loose description. Some truly are; others try to keep their community cred, but act more like the big banks and, in some cases, try to emulate them.

October 13, 2011 | Unregistered CommenterFearLess Staff

@Jo Thanks for pointing out the oversight. We meant to type "not-for-profit" and corrected it within the post.

October 13, 2011 | Unregistered CommenterFearLess Staff

@bluebluesdancer You can certainly open a new account at a credit union before canceling an old account. I echo the sentiments expressed by @Lironah. Be careful of the minimum balance required.

October 13, 2011 | Unregistered CommenterFearLess Staff

@Mother PeePee Check out this infographic to see how the big banks got to be too big too fail: http://slyoyster.hypervocal.com/wp-content/uploads/2011/09/big-bank-theory-chart-large.jpg

October 13, 2011 | Unregistered CommenterFearLess Staff

@Leila All good points. Thank you for sharing.

October 13, 2011 | Unregistered CommenterFearLess Staff

@Casey The blog post referenced cash reserves accounts tied to deposit accounts. There's no reason to keep those open if you're closing the deposit account. Furthermore, closing those cash reserves will not negatively impact your credit score.

October 13, 2011 | Unregistered CommenterFearLess Staff

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