Bye bye old bank, hello new bank!

Moving to another financial institution can seem fiddly, but it's achievable, whether it's cash or debt you're looking to shift.

Time to move your bank account? Exciting times!

This is where you begin to really make an impact. By pulling your cash out of a bank funding fossil fuels, you’re making sure your money isn’t helping that bank lend in a way that speeds up wealth pie shrinkage.

Go you!

Keep in mind the general tips in the Act primer:

• Don’t get sucked into a scam site

• Sidestep any luckily-timed phishing attempts

• Move your moolah gradually

Now, let’s get into the specifics about shifting. Firstly…

What are you moving?

I ask because your approach is going to depend on whether it’s:

• cash, such as in a savings or transaction account, business bank account or perhaps a term deposit

• debt, such as a mortgage, credit card, overdraft or personal loan.

The former tends to be easier than the latter, simply because it’s your money. Debt is really the lender’s money, so you have to get approval to move it.

But don’t let that put you off. They’re both achievable.

Let’s start with the easy one…

Cash moves

Halt! Before you actually move, there are circumstances under which you might want to delay.

For example, if you have a term deposit.

Rather than lose the interest by breaking into it early, you may prefer to wait till the term expires. If you were planning to continue keeping the money in a term deposit, then you might look to move.

MoneySmart has all the important info in term deposits.

If you’re satisfied the time is right, you may proceed…

The process for setting up a new cash account is usually as simple as:

• signing up with your new bank,

• verifying your identity through their Know Your Customer (KYC) process, then

• starting to move your money across.

These days, you can generally do this from your device.

Because banks are trying to get you as a customer, it should be fairly easy to spot the ‘Sign up’ option on your chosen bank’s site. If not: try searching for it, verifying you have the correct domain of course (remember Jacomi’s cautionary tale?)

Once you’ve signed up and the account is ready:

» Take careful note of new account details

Account name, BSB and account number, plus the PayID if you have assigned one, need to all be stored safely and error-free wherever you like to store such things.

» Transfer a token amount

I said it in the last post, but it bears repeating:

If you’re setting up a brand new account with a brand new bank, don’t transfer the entirety of your life savings to it on the first go.

Start by moving a little bit.

As part of the transfer, you’ll go through the account verification process, which involves your current bank checking the new bank account details match what’s recorded.

Note that these databases take time to update, so if you’ve only just opening the account five minutes ago, the details might not be available for verification.

Look, it’s no big deal to wait a day or two after opening the account before you start moving money. If you’re worried you’ll forget, put a nudge in your calendar or to-do list.

Once you’ve checked the new account to confirm it’s landed as intended, you can set about transferring more.

Before you empty it completely, please:

» Hunt for direct debits and regular transfers

If you have direct debits or scheduled transfers coming out of your account, you’ll want to make sure there’s enough cash in your old account to cover the costs until you update said money movements to the new account details.

All this takes time. Not for you - for the institutions moving your money. It’s not uncommon for new account details to take two weeks to be fully implemented in their accounting systems, and you don’t want to get hit with a dishonour fee.

Maybe don’t shift all of them the day before you know they’re due?

But you do need to shift them.

So, have a look at your last 12 months’ of transactions.

See any transfers or direct debits needing an update? Make a list and work through it, until they’re all done. If you think you may one day wish to change the instructions again, you may like to save the ‘change direct debit’ URLs in a note somewhere for later.

» Update with payroll

Has your pay been going into the account?

Update the details with your employer so future wages go into the right account. It may be worth waiting till one pay cycle with the new account has been completed to make sure it worked.

» Download any statements available

This goes for bills too, especially if you use your online banking like a filing system for BPAY (gulp, that’s me).

You may need this documentation to prove your saving prowess if you go for a loan in the future, or for tax reasons if you’ve been earning interest.

Save them somewhere you won’t lose them.

And if you’re like me, you might want to…

» Download your transactions

…. in something editable too. Like a spreadsheet.

I do this every year with my accounts, as I find spreadsheets easier to use than bank statements in PDF form. It’s easier to sort, filter, sum and all those fun things which can help you work out where your money is going.

» Decide if you’ll close the old account

As long as there are no fees for keeping the empty account open, closing it is optional. You can leave it sitting there empty if you want.

Or, you can ask the bank to close it. If you close it, be sure to tell them why you’re leaving.

» If it’s business banking, you have more homework

Changing a business bank account means you might have some more to sort out.

For example, you may need to:

• Update online systems you use. For example, if you’ve got Stripe connected to your bank account, or you use an accounting package like Xero.

• Update your invoices. And please note you’ll need to remind your clients of the new bank account explicitly and possibly repeatedly and in big, highlighted text. Keep in mind there are lots of scams where people send new bank account information affecting businesses, so your clients may be sceptical. You may like to phone your clients to let them know this is coming in advance.

• If you’re a registered supplier with a client, for example in their SAP system, you may need to contact them to arrange updating the information. Many will have a security process you’ll need to follow, so don’t leave this to the last minute.

Phew! That’s the cash accounts covered. Now, how about…

Debt moves

Cash is your money.

Debt is the lender’s money, which you have borrowed on the proviso you’ll pay it back, usually with interest.

Whether it’s a mortgage, credit card, personal loan or overdraft, the lender likely had to assess you before saying ‘Okay, here’s some money.’

So, you can’t just pick up and leave. You’ll need to get approval for the same type of debt with your new institution before you try to move anything.

Which can make this tricky, especially if your circumstances have changed since you first got the debt.

» Will you qualify for another debt?

Take me for example.

Along with hubby, I’ve got a mortgage on my home. We took out the loan 11 years ago when Adam’s wages alone were enough to qualify (I was already paying myself a pittance out of my business by then).

We’ve been excellent customers, paying on time, and our offset is full so we don’t pay interest.

But Adam’s not working at the moment.

There is no way we’d qualify for the same loan again, anywhere, unless we went for an expensive low-doc option which I’m not keen on.

So, the options I’ll accept are:

• Keep the mortgage with the same bank, which is funding fossil fuels.

• Pay out the loan entirely and exit the bank.

There are other circumstances like this which might make it impossible to move, like you’ll no longer be eligible for a credit card. This often happens to pensioners, who cancel their old card then learn they don’t qualify for a new one as their income is too low.

Now, some folks might say ‘Good! Credit cards suck.’ I personally appreciate their superior fraud protection in today’s online shopping world.

Either way, you don’t want to find yourself without the option by accident.

So, first things first:

Get a pre-approval for the institution you’d like to move to.

If it’s a mortgage, you can also decide:

» Do it yourself, or use a broker?

You can go either way. It’s a question of preference.

Rather than repeat their excellent content, I suggest checking out these MoneySmart guides:

• On switching your home loan

• On using a broker

Whichever, you choose, please be 100% sure you have…

» Checked all the fine print first

Are you happy with the terms and conditions of the new loan?

Do you understand the costs of switching?

Don’t sign on the dotted line (or apply your digital signature) until you’ve answered every niggly question to your complete satisfaction.

If you decide you’re ready to hit ‘Go’ on the transer:

» Download everything before you switch

As for the cash accounts above, please grab copies of your statements, especially your annual interest charges if your debt appears on your tax return.

Phew! That was a lot.

Now you’ve got your bank moves sorted, it’s time to look at super…