Last week I wrote a few posts about banking. The reason behind that is that we just switched banks and although I wrote about all the things you need to do to insure a seamless bank move, I learned those by doing everything the wrong way.

And the comment about my wife saying that the first thing to do when switching banks is make sure your spouse is on the same page was spurred by the fact that I didn’t actually talk to my wife about changing banks. I mentioned it to her, and then just ran with it. I really should have talked it over with her and made sure she was comfortable with the change. In fact, she is the one who logs into the bank and pays the bills, so changing BillPay systems effects her much more than it does me.

To best explain what went wrong, I will use the numbering system from my previous post but put things in the order that I did them.

3. Check with your employer about changing direct deposit.

For some reason, this was the first thing I did, probably because I walk by the HR department every day at work. I didn’t get the process started because I hadn’t actually opened the new bank account but I checked to see how long the process would take, and I got the required forms.

1. Open the new bank account.

After checking my direct deposit, I went ahead and opened the new account. So far so good! 🙂

7. Get Payees set up.

I felt getting payees moved from the old bank to the new bank was the logical next step in the process, even though there was no money in this account to pay bills with. Honestly, I was nervous about convincing my wife to switch banks, so I thought if I got the payees set up and she didn’t have to do any work to use the system, she would be less likely to be mad 🙂 She was dissatisfied with the old bank as much as I was, but doesn’t like change.

4. Set up electronic connections between banks.

I felt I needed to get all the money moved into the account from the old as soon as possible, so I set up connections between all my banks.

8. Make the switch final.

So I felt like everything was under control and I moved most of our money from the old bank to the new bank. You probably noticed that I missed a few pretty important steps. I hadn’t ordered checks or debit cards from the new bank yet (step 2), I hadn’t gotten my direct deposit changed (part of step 8 ), because I didn’t have checks, I didn’t check the old bank account for automatic withdrawals like my wife’s gym membership and our auto insurance (step 6), and worst of all I didn’t evaluate when the best time to switch banks based on when we pay our bills was (step 5). Just by chance, I changed banks at the worst possible time during the month, right as our biggest bills come due.

Here is the disaster that unfurled from that point forward, in condensed version, and it was all my fault for jumping into the process of changing banks without thinking ahead.

I must stress again that my wife knows when all the bills are due, knows when she sends payments and how long it takes to get there far better than I do. She also is more in-tuned to how our bank fluctuates during the month. I know, I’m the PF writer..I should be on top of this stuff too, but this is how my wife and I have always done things. I check on our spending weekly, and make sure we are saving enough throughout the month but my wife is really the one that has a handle on accounts payable.

I knew there was a check we had written (because my wife reminded me multiple times) for a large amount of money from the old bank that still had not been cashed, so I left just enough in the account to cover that check. This move plus the fact that moving money between banks takes at least a day put us in a bit of a pickle. My wife soon reminded me that her gym membership would also be going out soon so I moved a little money back from the new bank to the old bank.

We had to make some purchases at a couple places that didn’t take American Express (our one credit card that we put all purchases on, and pay off at the end of each month) so we had to use our debit card, which was from the old bank. This drained a little out of the little we already had in the old account. Thus I had to move more money back.

Because things weren’t going exactly as planned for the bank move, I had been checking both bank accounts every morning to make sure things were still OK. This next morning, I woke up to quite a surprise. The check we were waiting on was cashed, and all the little purchases we had to make on the debit card went through, leaving us with .18 cents in the checking account!

Needless to say, my wife and I were both freaked out. I called the old bank, and the new bank, to see if there was anything we could do, such as instantly moving money, or putting a hold on pending transfers. Everything we thought we could do would take at least a day to process, so I initiated a transfer into the account from the new bank, and we just crossed our fingers. Luckily, nothing else went through, and the next morning there was a healthy balance in the old account again.

Then it happened. My wife and I are very proud of our banking record. We have never had an overdraft, ever. We are always careful of how much we are spending right out of checking and make sure to have enough in our account to cover anything going out. But because I went about this bank switch in the very worst possible way, at the worst possible time, without the proper planning, which resulted in having way too much money stuck in limbo because of back-and-forth transfers between banks, we had an overdraft out of the new account.

I got everything taken care of, already had overdraft protection on the new account, and wasn’t charged any fees by the overdraft but it certainly was a wake up call.

All of this could have been avoided if I had approached the bank move with caution and did things right in an organized way and I hope that the mistakes I made can be used as a lesson of what not to do.

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Tags: bank move, banks, direct deposit, electronic connections, hr department, money, new bank account, numbering system, old bank, wrong way