The Switch

Using the Pull Out Method is going to require a little bit of prep work on your part, but the results, and ending your anxiety of Financial Disobedience, are well worth the effort. Plus you’re probably considering joining a credit union where you will have more agency and consent in your relationship, and hopefully complete satisfaction. Here’s some advice on how to use the pull out method.

Switching Banks: Step By Step

Before closing your account, you’re going to want to set up your new account and give yourself enough time, so that it is a seamless transition (and you don’t forget any outstanding checks or automated transactions).

[From “Close Your Account & Switch Banks: The Breakup Guide” by Richie Bernardo  on WalletHub |  Jul 24, 2015]

Step 1: Start A Relationship With A New Bank 

First step is to open a new account, so you can set up all your automatic transactions without interruption. The Pull Out Method recommends visiting DeFund DAPL’s website that lists alternative options to discover what would be right for you.

Step 2: Reroute Auto Payments & Direct Deposits To Your New Account

Review your bank statements from the past 12 months, and list every automatic transaction, including when it’s usually due or deposited and how much. One year of bank statements is necessary, as some transactions are infrequent. For example, if you no longer want your magazine subscription, don’t assume your bank will reject the payment after closing your account. Banks are known to reopen inactive accounts if automatic payments weren’t properly shut off beforehand (more details on that in Step 6) — not to mention the late fees you could incur from the biller.

There are three kinds of transactions you should look for:

  • Payments you set up in your bank’s online bill pay system. Rerouting these payments is a two-step process. Once you’ve scheduled these payments in your new account, you’ll need to turn them off in your old account. Otherwise, you risk sending duplicate payments.
  • Payments set up elsewhere that automatically withdraw from your account. You may have a car loan or mortgage payment that is processed through ACH. Don’t overlook small payments such as a Netflix subscription, or things like transit passes that automatically reload when they reach a low-balance threshold. For these payments, you’ll simply need to provide the biller the details of your new bank account.
  • Deposits such as a direct deposit of your paycheck or Social Security benefits. To change these over to your new account, you may need to complete new paperwork and/or provide a voided check.

Some billers require extensive advanced notice (e.g., 30 days) to process your new payment information. You’ll want to keep your current account open with enough funds until the last transactions have cleared.

Step 3: Put Your Old Account Into Hibernation

To avoid unpleasant surprises, stop using your old account, keep it open for a month or two and leave some cushion money (e.g., $200) — if you can afford to do so —to cover unexpected auto transactions that weren’t properly deactivated by you, your bank or the biller. Also leave enough to satisfy minimum balance requirements so you don’t pay a monthly account maintenance fee. 

Step 4: Close Your Account Permanently

The Pull Out Method will be organizing mass pull outs starting February 1st. If you want to join one of our events or organize your own, here are ways to get involved.  Either way, we recommend sending your financial institution a letter explaining why you are choosing to close your account and withdraw your funds.

As you close your account, some things to consider:

  • If there are no funds in your account and you do not owe fees to your bank, you are good to go.
  • If there are funds in your account, your bank will subtract any applicable fees and ask you to collect the remaining funds through the same channels above or strictly in person, depending on your bank. You can request the refund in the form of a cashier’s check or an ACH transfer, which takes about one to two business days to process (wire transfers are usually faster, but you’ll pay significantly more ). Keep in mind that you may need to wait longer for your refund if your account has a large balance.
  • If your account has a negative balance, you will not be able to close it until you bring your account back to positive and pay the resulting fees. And if you don’t pay these back within a reasonable time (e.g., 30 days), your bank can close your account “for cause” — in this case, for failing to pay outstanding fees and leaving a balance in the red too long. It could also send the account to a collection agency, which will hurt your credit score.

Step 5: Get Confirmation In Writing

Ask your bank for a written letter that documents all the details of your account closure. Keeping a paper trail will help you in your financial life ­— and your cause if you need to use the letter in a future dispute.

Step 6: Review Your Final Bank Statement

With sensitive personal and financial information more vulnerable to identity theft nowadays, you should carefully review your last bank statement to make certain that no unauthorized transactions were made prior to shutting down your old account. Otherwise, contact your bank immediately if you don’t recognize a transaction posted on your statement.

Also look out for future correspondence from your old bank, especially within the first 45 days of closing your account. Many banks will automatically resurrect a dead account if you didn’t properly deactivate an automated payment or if a biller failed to honor an automatic payment termination. When this happens, the account becomes what is commonly known as a “zombie account.” In such a case, having the confirmation letter from Step 5 could be helpful.

Switching Other Types of Accounts

Credit Cards

Transferring a credit card balance can save you a lot of money, but there are a couple of things to keep in mind:  “What is a balance transfer? 9 things you should know” by Melody Warnick on CreditCards.Com | Dec 28, 2015.

Business Accounts

Closing your business account can have a larger impact on financial institutions than a small personal checking account, however these accounts can be a bit more complicated to close: “How to Close a Corporate Banking Account” by Alia Nikolakopulos on Huston Chronicle.

Loan or Mortgage

Trust Account

Trust Accounts can also change institutions. Learn about how credit unions can open trust accounts:  “A Refresher on Trust Accounts: Even without trust powers, CUs can open trust accounts” on Credit Card Magazine | July 1, 2012.

And info on how to terminate a trust account: “How to Terminate a Family Trust Account” by Anna Assad on Legal Zoom.