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    What To Do When Your Bank Closes

    People change banks all the time. It can be a bit stressful, but it is a premeditated choice where the consumer has control of the situation. But what happens when your bank closes? I don’t mean closing at 6 p.m. on Friday night or not being open on Sundays. I mean when they cease operations and will no longer be there for you.

    Last month, niche bank PerkStreet announced it will cease operations on Sept. 26. There was no warning, no hints, no indication that it was coming; it came as a complete surprise to everyone. It would be an understatement to say that people are worried, myself included, about their checking and savings accounts with PerkStreet. Wouldn’t it be wonderful if there were a checklist that would make it easier to get through this trying time? Well, it just so happens that I have one.

    What to do when your bank shuts down:

    Step 1: Don’t Panic

    If you live in the United States, it would be very difficult to lose your money with a bank that closes. That is because most banks have Federal Deposit Insurance Corp. (FDIC) insurance on accounts holding up to $250,000, so you’re protected.

    In the case of PerkStreet’s closing, they gave us 45 days to move our money or allow it to transition into their partner bank, Bancorp. There’s time to talk it over, make a decision and pull the trigger on where your money should end up. Crisis averted.

    Step 2: Stop Using The Account

    This is an obvious step, right? Stop to think about what payments you have outstanding, where you keep your book of paper checks and how many debit or credit cards you have in various purses and wallets. Gather them together and cut them up. This ensures you won’t be worrying about a check that hasn’t cleared yet because your nephew hasn’t cashed his birthday gift yet.

    Step 3: Open A New Bank Account Elsewhere

    The world is your oyster; go pick your new financial pearl.

    • Like to feel like you are supporting your community? Open an account at a local bank.
    • Want your money to work a little bit harder? Credit unions often have better savings rates.
    • Travel much? You need a national brand with lots of branches and ATMs.

    I won’t focus much of my new-bank search on savings and checking account interest rates; I prefer convenience and excellent customer service. Consider what your needs are and use websites like KnowYourBank.com and FindABetterBank.com to filter your favorite options.

    Step 4: Change Your Automation

    As soon as your new account is open, it is time to change all your bill pay, automatic deposits and automatic drafts. This is the most important step, because you don’t want an investment account or mortgage payment hitting an old account with no money and deciding to charge you a returned check fee or late fee. It shouldn’t happen, but why take the chance?

    It may take a few weeks for your paychecks to start making it into the new account. Ask your payroll or benefits department if there’s an alternative solution if time is short between switching accounts.

    Step 5: Delete Card Numbers From Online Accounts

    Don’t forget to delete any card numbers from online accounts. Amazon and iTunes are just two of the many websites where my PerkStreet debit card is stored. Then there is BeatPort, eBay, Frontier Airlines and a bunch of other sites that I have used over the past few years.

    Step 6: Close The Account Permanently

    After waiting for all checks, charges and bill-pay drafts to clear, it is time to transfer any remaining balance to your new bank and close the account permanently. You could receive one more statement from your old bank;  keep it in your files for at least two years. This is proof that your account had a zero balance and no activity on it, just in case someone tries to push some charges you didn’t authorize.

    Changing banks is similar to moving: You have to look back before leaving to make sure you haven’t left anything behind. It’s not fun, but the new home for your checkbook will enjoy a smooth transition if you have followed these six steps when your bank closes.

    —Steve Stewart

    Steve Stewart was a financial slob, at least he was until he met his wife. But even after the wedding, self control and will-power weren't his strong suits. However, having a baby changed him. Funny how that happens, huh? The importance of managing money at home became a priority where one hadn't existed before and when he learned that a budget helped his financial self-control problems, the "money thing" started to improve. Now he and his wife, along with their pre-teen daughter, are debt free except for a mortgage and he can't help but shout to the world about good, solid financial principles. Steve helps everyday Americans pay attention, not interest, with a weekly online radio show and through Financial Coaching. He has helped couples from the East Coast of the United States to a lad in the UK, and has even had an article featured on the Dave Ramsey Radio Show. He walks the average Joe through all the complicated money mumbo-jumbo and breaks it down to the basics with his personal, conversational-like style. It is true that anyone can retire wealthy and Steve can set you on the path to Financial Freedom.

    | All posts from Steve Stewart

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