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For many people, the ability to go into a local branch is an important part of the banking process. If your local bank branch closes, you might consider searching for a nearby branch, finding a convenient ATM, banking online or switching to a different bank altogether.
If you're searching for options because your branch recently closed, you're not alone. Some 9% of all U.S. bank branch locations closed between 2017 and 2021, totalling about 7,500 physical locations, according to the National Community Reinvestment Coalition. Discover why banks are closing, what to do if your branch disappears and how to switch banks if you think that is your best option.
Why Are Banks Closing Branches?
In 2021, while just 101 banks and thrifts opened, 200 closed permanently, leaving 82,474 active U.S. branches, according to S&P Global Market Intelligence data. The fallout from the pandemic; mergers and acquisitions; the lack of demand; and an increased use of mobile and online banking top the reasons why brick-and-mortar branches are closing.
While communities feel the impact of local bank branch closures, you have options when your branch closes its doors.
What to Do When Your Bank Branch Closes
While it can be frustrating and inconvenient when your branch closes, these alternatives can help.
Search for Another Nearby Branch
If your bank has multiple locations and you want to avoid switching to another bank or joining a credit union, it may be worth driving to a branch farther away. A short commute may be worth the banking relationship you've already developed and help you avoid the hassle of moving your accounts. After all, when you opened your account in the bank, you became the bank's customer, not the branch's customer.
Look for Convenient ATMs
If your bank has nearby ATMs, say inside a grocery store, you may be able to primarily use these ATMs for many transactions, including deposits and withdrawals. If you only use your branch for basic services such as these, this could be a simple solution.
Consider Online Banking
Because much of your banking can be done online today, such as through mobile deposit or bill pay, you might not even miss your local branch office. Online banking can be practical and convenient, and may even offer better rates on deposits. A J.D. Power 2022 U.S. Direct Banking Satisfaction Study reported about 27% of Americans use an online-only bank.
If you're left without a nearby branch and online banking won't work for you, it may be time to switch banks. But keep in mind that until you build a relationship with the new bank, it might take longer to get approved for products like loans and credit cards, given that you're a new customer.
How to Switch Banks
Whether your branch has closed or you're dissatisfied with your bank, you can always switch to a new bank. The process can be fairly simple depending on the types of accounts and how many accounts you hold at your current bank. Take these steps to make sure it goes as smoothly as possible.
1. Find a New Bank
Review your options. Do you want to walk into a local bank branch when you open an account or make a transaction? Do you want to consider a credit union? Maybe an online bank makes the most sense for you. Whichever way you prefer to do your banking, choosing the right bank is the first step. As you shop around, think about which features, perks and benefits are most important to you, such as:
- Multiple branch locations
- Debit card availability
- Online banking
- Mobile check deposit, automatic bill pay or accessing your bank account 24/7
- Low or no fees or other bank charges
- Higher interest rates on savings and high-yield checking accounts
- Convenient ATM access
- No minimum balance requirements on checking or savings accounts
2. Take an Inventory of Automatic Payments and Deposits
Arguably the last thing you want is to miss a payment or have your paycheck deposited into your old account. To ensure this doesn't happen, make a list of all your current automatic transactions, which might include:
- Automatic bill payments
- Direct deposits
- Recurring transfers
- Multiple linked accounts, such as Paypal or Chime
- Subscriptions, like streaming services or gym memberships
3. Open Your New Bank Account
Once you've decided on a bank, it's time to open a new account, which you can often do online, over the phone or in person. It's important to leave some money in your old bank account for a month or two to cover any automatic payments or outstanding checks you might have missed. When opening your new account, the bank will likely ask for some general information, including:
- Name, mailing address, phone number and email
- Date of birth
- Driver's license or State I.D.
- Social Security number
You'll also have to add funds to your new account. If you do this online, you'll likely need to provide the account and routing numbers for your current bank. Sometimes, the new bank will require deposit verification by making two small deposits into your account.
Some banks also require a minimum deposit to open or maintain your account, so ask about any fees they may charge for falling below these minimums. If you add another person to your account, such as a spouse, you'll also want to supply their information.
4. Set Up Automatic Payments and Direct Deposits
When switching banks, setting up automatic payments and direct deposits can take time, but doing so will give you the chance to weed out old bills and subscriptions you no longer need. Once you decide which payments to update, follow these steps:
- Open the payment center either online, in the mobile banking app or with a banking representative in person at your new branch
- Add each payee individually and set up recurring payments
- Remove old banking information and enter new account numbers
- Save and confirm this information
- Set up direct deposit of your paycheck, if applicable
- If you run into any problems, contact your new bank
5. Close Your Old Bank Accounts
Once you're satisfied everything is in order and you've updated all transactions, you can close your old bank account. It's possible you'll need to visit a branch in person to close your accounts, but sometimes it may only take a phone call to customer service or submitting a written cancellation request. Depending on the bank, there's also a chance you can do this online. Your next steps may include:
- Destroy debit cards and paper checks connected to your old bank account
- Ask if there are any fees for closing your account
- When you get your final statement, check to see if there are any errors or payments and deposits you missed or need to transfer
The steps to take when closing your bank account can vary from one bank to the next, but are usually spelled out on your bank's website or in your account agreement.
The Bottom Line
Now, more than ever, where and how you bank is up to you. So, if your bank branch closes, you have options like banking online, switching banks or staying with your existing bank at a branch across town. In addition, you may want to consider setting up bank account alerts that can monitor your checking and savings accounts for fraud and track your spending. Likewise, monitor your credit for free at Experian to detect possible identity fraud sooner and prevent surprises when you apply for credit.