How To Divorce Your Bank in 5 Easy Steps

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With all of the ire Americans are directing toward big banks these days, a lot of people are talking about making a change. Protests like the Facebook-driven “Bank Transfer Day” urge consumers to pull up stakes and switch their banking to a credit union. Fans of local and community banks have taken to the blogosphere and social networking sites to sing the praises of institutions where the tellers know their names and there are no “gotcha” fees.

There’s no getting around it, though: Switching banks is time-consuming and takes commitment. In fact, consumer advocates like Pamela Banks, senior policy counsel at nonprofit Consumers Union (which called for a federal investigation into Bank of America’s recent $5 debit card use fee) say consumers preparing to switch banks should steel themselves for the hard sell. “Generally, when  a consumer notifies a bank they want to switch, the bank will try to convince them to stay,” she says.

Even for people who are determined to leave, there’s a fair amount of hassle. Conveniences like direct deposit and automatic bill pay can become anything but convenient when you’re trying to transition your financial life. But with a bit of advance planning — expect the switchover to take about 30 days, says Ruth Susswein, deputy director of national priorities at watchdog group Consumer Action — it’s possible to make the transition relatively painless.

(MORE: Wall Street Protests Get Specific: Could ‘Bank Transfer Day’ Pit Americans Against Their Big Banks?)

1. Figure out what you want. Make a list of what you’re looking for in a bank and what you’re not getting from your current institution, and then do some shopping. Create a checklist of your personal must-haves and dealbreakers — mobile banking, no ATM fees, remote check depositing, online bill pay and so on — and look around for a bank or credit union that fits the bill. When you think you’ve settled on one, be sure to read all the fee disclosures so you don’t get stuck in an account that tacks on the kinds of fees you were trying to avoid in the first place.

2. Plot your move. Ideally, you’d open your new account, switch over your direct deposit and any recurring payments, and leave enough money in the old account to cover any bills that straggle. But even if you’re living paycheck to paycheck, it’s not impossible to switch banks without overdrawing the old account and getting zinged with fees — but it will take more methodical strategizing. Start by figuring out how long it will take to process your direct deposit switch and to change the account information for any merchants set on automatic billing. You may even want to mark up a calendar to help identify the best date to make the switchover.

3. Make your move. Open the new account with the minimum required balance so you can get the ball rolling; you’ll need the account number and routing number to transfer your business. Even if you’re not a heavy user of paper checks, order some for your new account in case you need to provide a voided check to switch your direct deposit. Switch your direct deposit over first. After it’s being deposited in the new account, shift recurring payments to the new account. But make sure to maintain enough of a cushion in your old account to cover any leftover payments.

(MORE: Bank of America Backlash: Consumers React to Debit Card Fee)

4. Check up: Given the potential for overdraft fees or your credit score taking a hit if a payment is sent to the wrong account, it’s worth the sweat the details. A few days before each payment is due, call that merchant and verify that they have your new account information. Go through your transaction history and make sure there are no outstanding checks circulating that could could be deposited after you close the account. Also, don’t forget to enter the new account information for bills you pay online.

5. Close your old account. Before you bid your old bank goodbye, there’s one more step to take: If you get electronic statements and check images, either save them as PDFs on your hard drive or print everything out before you close the account. If you had a monthly fee that was being waived because you were getting direct deposit, leave enough money in your account to cover that until the process of closing the account is completed. Ideally, you’ll want to draw down the balance as much as possible, then have the bank cut you a check for the small amount that remains. Banks have different processes for account closures; some will let you do it in person while others might require that you submit a form by mail. Whatever paperwork you fill out, make or ask for a copy for your records.