The latest bank to announce that it is changing its customer accounts is Wells Fargo Bank, which said on Wednesday that it was phasing out the traditional two-year open account facility. Its decision follows the recent announcement by Bank of America, another big name in banking, that it is considering changing all of its Bank Accounts, and will make the move to automatic transfers in coming quarters. Both moves are being seen as signs that more businesses are looking at alternative means of receiving deposit funds, rather than relying on the services of the big US banks.
What does this mean for customers? For starters, it means that you’re going to have to change your banking details now, in order to take advantage of any new current account or savings offers that your bank might be having. You’ll also need to decide whether you want to move your money into one of its new current accounts, or whether you want to continue managing it via direct debits. It also means that you may not be able to do so, should you decide to close your current account. So what’s the difference?
The big difference is that if you transfer your checking and savings cash into a checking account with Bank of America, you’re not actually saving yourself any money. All of the interest that you earn on your CDs will still be earning interest, even if you transfer it into the new Bank of America account. This is because the interest is “non-guaranteed”, meaning that you don’t have to pay it back in case you lose your money. On the other hand, switching to a bank that offers direct debits means that you can use those funds for whatever you want. That’s because the money is debited directly from your savings, not from a CD. If you need to spend the money right away, this makes sense – but if you don’t need access to it right away, the debit is a better option, since you’ll end up paying less interest over the long run.
One of the nice things about Bank of America’s debit cards is that you can switch money between them as often as you’d like. If you move money from your old account to your new one, you can do that as often as you’d like, too. But when you move money from your current account to your new account, Bank of America requires that you use your credit card for at least twelve months in order to take advantage of this benefit. (This really varies by state; California has a much shorter time frame.) Keep in mind that even though Bank of America does require that you use your credit card, many banks may allow you to transfer funds without using a credit card – just make sure you read their terms carefully.
Of course, there are some things to consider when switching accounts. Bank of America’s terms of service might prohibit you from transferring money from your old bank account to their new one – or at least that’s the way it’s meant to work. Other banks might not have this restriction; in fact, many of them offer direct transfers from old accounts to new ones. So make sure that you check with your bank and find out what they actually allow you to do.
Switching banks may be good for you, but you should still consider all of your options. You can always try another bank or use the Internet instead. There are a number of websites that offer reviews of different banks and which may help you decide which is best. You might also look into credit unions, which offer better interest rates than traditional banks and might be an easier financial fit for you. Either way, make sure you compare interest rates, charges, fees, and more, so that you end up with the best deal possible.
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