Banks are constantly being gobbled up by larger financial institutions looking to expand their empire. This trend can be extraordinarily frustrating if you’ve spent a long time with a bank you like and then a larger one takes it over and changes all the rules.
Getting accustomed to the changes can be unsettling and even expensive. But before you jump ship and transfer your funds to a different bank, consider these 9 tips.
Bank Merger Checklist – What to Do
1. Do Not Panic
If your bank was just purchased or taken over, do not panic. Sometimes nothing significant changes at the consumer level aside from new deposit slips and a new sign. But even if changes are coming, the merging of two banks’ systems takes time. In other words, you will probably not feel the effects for at least several months.
2. Learn the New Bank
Once the acquisition or merger has been announced, get to know the new bank as quickly as you can. Whether it’s a large national bank or a smaller regional player, there’s usually a website you can go to that details the bank’s account structures.
For example, does the new bank offer an account like the one you had with your old bank? If you find a similar option, check it for associated fees. If you are used to free checking and the new bank doesn’t offer it, your account may not be free for much longer. On the other hand, the new bank may charge you less for services you’ve been accustomed to paying for.
3. Check on Upcoming Changes
As the bank merging process continues, significant changes to various types of accounts will be announced. Pay close attention to all e-mail and paper correspondence you receive from the new bank. Be wary of e-mail phishing hoaxes, however.
The bank must legally inform you of changes to your account. After being notified, you will have time to make adjustments or switch to a new bank. Again, do not panic.
4. Determine if You Need to Stay or Go
Once you are made aware of the changes, decide whether you can accept them or if you need to find a new bank. Perhaps the changes are minor or your particular type of account is unaffected. If that is the case, consider staying since moving between banks can be a hassle. But if new fees will be added or you’ll otherwise be inconvenienced, don’t be afraid to take the leap and search for a new place to bank.
5. Negotiate with the New Bank
If new fees are added or your account is changed, don’t forget that you have leverage. Explain to the new bank that you will take your business elsewhere unless they let you keep your account under the old rules, known as “grandfathering” you in. At the very least, request that they compromise and meet you in the middle. Most banks will bend over backwards to prevent a stable, long-term customer from leaving.
6. Prepare for a Bumpy Transition
In an ideal world, all your banking services would continue to function normally; your debit card would work, the checks you write wouldn’t bounce, your employer’s direct deposit would hit your account on time, and your automatic bill pay transactions would go through. But there are bound to be some bumps with a bank merger, so do not be caught off guard.
To combat potential issues, consider the following:
- Disable direct deposit temporarily to receive a paper check from your employer (or re-route the direct deposit to another bank if you have a separate account).
- Suspend automatic bill pay and manually pay bills (send in payment earlier than normal, so you can deal with potential bank issues before your payment is past due). Alternatively, you can re-route your bill pay to a separate bank account.
- Have additional cash on hand in case your debit card stops working.
- Make sure your mortgage payments go through smoothly. Send in your payment early and verify with the lender that it was received and processed correctly.
- Download detailed financial records into your financial software of choice (e.g. Mint.com or YNAB). This is to provide documentation of your account history (i.e. bills paid, loan balance, account balance) should any of the bank’s databases get corrupted during the transition.
- Lastly, if you do end any of these services like direct deposit and bill pay, be sure to restart them once the merger or acquisition process is complete.
7. If You’re Leaving, Shop Around
If all else fails and you decide to leave, check out local options as well as regional, national, and online banks. With so many available, you should be able to find a bank that easily meets your needs. In fact, the process may make you aware of banks with better and cheaper services than your old one. Perhaps you’ll find savings and checking accounts with higher interest rates, lower minimum balances, or less fees than you’re used to paying.
8. Make the Move
Once you identify a new bank, make the financial move. You need to electronically (through ACH transfer) or physically (through cash or check) move your money from one bank to another. Electronic transfers are preferred due to the low risk of losing funds during the transfer. Never transfer large sums of money in cash – being robbed would be devastating. A personal check or cashier’s check is a safer, “physical” way to fund a new account. You also need to set up automatic transfers, direct deposits, and Bill Pay (including credit card bills) at your new bank. Forgetting to do this could cause you to accidentally miss payment due dates or even accumulate unnecessary debt. See this extensive guide on how to switch or change banks for more tips.
9. Close Your Account
When you transfer funds to your new bank, make sure you leave a small sum of money in the old account. You may have outstanding debit card or paper check purchases floating around. You do not want to find out after closing your account that you bounced a check.
Two months is good period of time to allow forgotten paper checks or debits to clear. At that point, close the account and take the cash over to your new bank.
Because you rely on your bank daily, having it change through acquisition can be frustrating and even scary. These steps are similar to the steps to take when your bank fails, but without the pressure of potentially losing access to your funds.
Try to look at a change to your bank as an opportunity. Habit and routine can be comfortable, but when was the last time you shopped around for the best new bank account promotions? Maybe the new bank you find will be even better than the one you had before.
Have you ever gone through a bank merger? What was the process like and what did you ultimately end up doing?