I’ve been a Wells Fargo customer since January 2013. I opened my first credit card with the bank, my first and second set of business deposit accounts, and had my personal deposit accounts with them. In total, I had five accounts with Wells Fargo.
I started having second thoughts about my loyalty to the bank in September, when revelations of Wells Fargo’s fraudulent sales tactics came to light. From 2011 to 2015, in an effort to boost their sales figures, Wells Fargo representatives opened more than 1.5 million deposit accounts and 565,000 credit card accounts without customer authorization, according to the Consumer Financial Protection Bureau. As a result, customers were charged a total of $2 million in fees. Wells Fargo agreed to pay a whopping $185 million fine to settle those claims, which were filed by the CFPB.
The scandal left me reconsidering my decision to bank with Wells Fargo at all. This month, I made the decision to close all of my remaining accounts with Wells Fargo and open up a new account elsewhere. I don’t know yet how many more Wells Fargo customers will join me, although the company’s third quarter earnings report indicated its retail business hasn’t survived the scandal unscathed. The bank saw a 25% year-over-year decline in new checking account opens, and credit card applications were down 20%.
Still, the bank’s customers are known for being loyal. Last year, Wells Fargo ranked the highest in customer satisfaction, beating Bank of America, Chase, and Citibank.
For me, the damage was done. It was time to switch banks.
Making the Big Switch
Moving to a new bank is hardly a painless process. That could be why so few Americans make the effort, despite a rise in onerous bank fees at large retail banks. Only 17% of account holders switched their primary financial institution in 2014, according to one study.
Here’s how to do it:
- Breaking up with my big bank
I quickly realized it was not going to be a clean breakup. A search on Wells Fargo’s website showed me that my account had to be empty before I could close it. That would mean either making one big cash withdrawal, or opening a new account at a different bank first and transferring the funds over.
I decided to go with option 2. I would open a new bank account and transfer my Wells Fargo balance over.
- Choosing a new bank
I used the MagnifyMoney checking account tool to guide me in the right direction. In the end, I chose to open an account with Ally Financial, an online-only bank. I had been considering opening an account with an online bank for a while. Online banks typically don’t charge as many fees as big banks because they have much lower overhead costs.
I opened a savings account, too. I was only earning 0.01% at Wells Fargo. Ally offers a 1% yield on its personal savings accounts, which will be a big incentive for me to save more.
- Transferring funds to my new bank
It took me five minutes to open a checking and savings account at Ally.com. At the same time, I linked my Wells Fargo account to my Ally account, which would allow me to transfer my funds over.
- Closing my Wells Fargo account
Once my account was empty, I sent an email to Wells Fargo through the bank’s online portal requesting the account be closed. Within 24 hours, a representative sent me a message saying my account would be closed in four business days.
- Keeping my zombie account at bay
Here’s the big risk when you close a bank account: It leaves a trace of itself behind. And any type of transaction — deposit or withdrawal — can reawaken the account. (They call them “zombie accounts” for a reason.) You may not even realize your old account was opened again, and you could rack up unnecessary fees for months or years until you notice it.
It only took me a few days to mess this one up. I closed my Wells Fargo account very close to my normal payday. I didn’t update my direct deposit account quickly enough, which meant my paycheck went into my old Wells Fargo account rather than my new Ally account. Suddenly, my “closed” account was reopened again. And I had to repeat the process — withdrawing funds and closing the account all over.
- Erasing my banking past
I decided to shred the debit cards that were previously linked to my Wells Fargo account. I also shredded my checkbook. It’s important to take these steps to avoid identity theft. Like I said, even the smallest transaction could reawaken my old bank account.
- Updating all my payment accounts
I make most of my recurring subscription payments through a PayPal account, so that made life simpler. I only had to change my bank account linked to PayPal. Next, I updated Venmo, which I use frequently to pay my roommates my share of rent and utilities. I changed my Amazon account information, went ahead and updated the rideshare apps I frequently use like Uber and Lyft, and updated my automatic bill payments with T-Mobile.
You should do this with any other apps you use that are linked to your old debit card or bank accounts. When you do change the information, make sure to delete your old bank account information so there’s no chance of accidentally charging the account.
If you use any online resources or applications to manage your finances, you should update them to keep information current. This is optional, but important if you want to keep track of where your money is going. For me, that meant updating my Mint.com account.
With all of that done, the bank switch was complete. It only took about an hour execute the steps above, and my Wells Fargo accounts were all closed within four business days once I got the closing process restarted.