Moving to the new bank: This is how an account switch works

Moving your checking account to another bank is easier than it first appears.

Moving to the new bank: This is how an account switch works

Moving your checking account to another bank is easier than it first appears. What to consider.

Farewell to negative interest rates: After the European Central Bank's key interest rate hike, more and more banks are abolishing the custody fees for credit balances in current and overnight accounts. But there are also banks that do not do this.

Which annoys quite a few of their customers so much that they think about switching accounts. Many financial institutions make it easy for new customers willing to switch and advertise with an account transfer service. In other words, you take care of all the formalities related to the change.

Help has long been a requirement. "Since September 2016, financial institutions have also been legally obliged to help consumers switch accounts," says Sylvie Ernoult from the Association of German Banks based in Berlin.

To do this, the customer submits an application to the institute to which he or she would like to switch. This gives the old and the new institute the mandate and authorization to switch accounts.

A prerequisite for the obligation to help with the change is that both banks - the old and the new one - are based in Germany. "And they both have to keep the accounts in the same currency," says Roland Stecher from the Bremen consumer advice center.

General information on how to switch accounts in accordance with the Payment Accounts Act and the application to switch accounts can be found on the institutes’ websites or in their offices.

What makes things easy for customers: "The change can be completely controlled from the new bank," says Stecher. If you open a new account there, fill out the application for account switching assistance. "This is done using a form in the branch or via the online banking portal."

The new bank must then contact the previous bank within two business days and request a list of the existing standing orders and direct debit mandates that have been issued. If desired, a list of available information on incoming credit transfers and direct debits from the past 13 months should also be submitted.

In addition, the new bank or savings bank can arrange for the previous institution to close the old account - if desired. "In the application, the consumer can also state a date that differs from the desired date of the account change, on which the previous bank should no longer process standing orders," says Sylvie Ernoult.

In general, the new bank or savings bank must react quickly as soon as it has received the information from the previous institution. "Five business days later, the new bank must have set up the desired standing orders and accept direct debits," explains consumer advocate Stecher. If the bank does not have all the information - for example postal addresses - it must request this from the customer or the original bank in good time.

Keyword costs: According to the Federal Financial Supervisory Authority (BAFIN), banks may only charge a fee for account switching assistance if customers have expressly agreed this with the bank. The fee must be reasonable and may not be used for the basic account transfer and account closure services mentioned above.

If the account switch does not go smoothly, for example because of delays, consumers can contact the responsible customer complaints office. "It's free," says Sylvie Ernoult.

If standing orders are executed late or costs are incurred due to a return of a direct debit, those affected have claims for damages, for example in the form of interest on arrears, according to BAFIN. Such a dispute can often be settled out of court via financial ombudsman offices.

You can also lodge a complaint with BAFIN. "This can impose fines on the banks in the event of breaches of duty," says Roland Stecher. Those affected can also send a copy of the complaint to the respective consumer advice centre.

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