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[Prefer to listen? You can find a podcast version of this article here: E215: How to Switch Banks (In 5 Steps)]

Not all banks are created equal.

There are a lot of banks to choose from. There are small community banks and credit unions, mid-sized regional banks, and large national banks that have a presence everywhere. There are online banks that don't have physical branches.

As of this publish date, the U.S. has over 4,000 banks and over 4,000 credit unions.

Side note: I'm using the term "bank" as a general term to include both banks and credit unions.

Working with individuals and families, I've noticed many people are dissatisfied with their banks. Sometimes it's the customer service. Sometimes it's the technology (or lack of technology). Sometimes it's features or interest rates.

However, despite the dissatisfaction, most people don't bother to switch banks. Sheer inertia tends to keep us complacent and prone to embrace the status quo, rather than go through the trouble of switching to a new bank.

But staying put can end up being a long-term problem. Every little annoyance, customer service issue, or technology irritation compounds over time and becomes friction in our lives. And it can even end up costing us money.

With so many options available, there is no reason not to be with a bank that meets your needs.

If the thought of switching banks sounds like a huge hassle, here's a step-by-step guide for getting it done.

Step 1: set up your new bank account

The first thing you need to do is set up your new bank account (of course). Once you've chosen a new bank, get your account(s) set up and make sure you have new debit cards in hand and ready to go before you do anything.

This could also be a good time to set up a service like Privacy.com (no endorsement or affiliation implied) which creates virtual debit cards that can be controlled with spending limits and specific usage rules.

Step 2: export your last 12 months of transactions

Next, you'll want to get a list of everything that is automatically coming out of your old bank account. In most online banking portals, you can export a CSV file containing your transactions.

Exporting the last 12 months is useful because you can catch monthly, quarterly, and annual recurring transactions. Open this CSV file in a spreadsheet app like Excel or Google Sheets.

Next, sort by name. This will group everything by the name of the service provider or store and will let you easily see what providers are pulling money from your account. Ignore the stuff that is everyday spending like groceries or eating out. You'll want to look for anything that is a recurring payment such as insurance, utilities, or other subscriptions.

Make a list of anything that needs to be updated. This whole process should only take 30 minutes to an hour at most.

Step 3: transfer your funds to your new account

Once you have a list of transactions, you'll want to transfer your money into your new bank.

Most banks will give you an ACH option which will let you transfer money electronically from your old bank to your new bank. If not, you can write a check to yourself and deposit it into your new bank.

Step 4: update your payment info with vendors

Next, update your payment information with all the services you found. Pretty much everything can be done online. This should also take 30 minutes to an hour.

Be sure you do this immediately after you transfer money into your new bank so that you don't have any payment glitches.

Step 5: cancel your old debit card

Next, you'll want to cancel your old debit card(s). This ensures that no new transactions can be charged to your old bank account through your debit cards.

Post-transfer cleanup

In theory, you should be done at this point. If any services got missed, they will send you an email when they try to charge your old debit card and you can update it then.

You'll also want to notify your old bank that you need to close your account. Do this as soon as possible because banks usually have a waiting period where the account will not "freeze" until a certain period of time passes with no transactions. If you missed any ACH payments, it could cause an overdraft on your old account if it's not fully closed yet so start the process as soon as possible.

You've now switched banks! While there is some work in moving to a new bank, an hour or two of effort can make life easier long-term and could be well worth it if you are not satisfied with your bank.

Don't let inertia and the comfort of the status quo keep you from improving your bank experience. Switching banks is not that difficult and can make life easier if you put in a little time up front.