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Bank-changing blues
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November 17, 1998: 3:34 p.m. ET
Unless you're careful, account closing can open up a real can of worms
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NEW YORK - Customers fed up with bank-merger madness are turning to small and regional community banks for empathy. In return, these institutions are offering a sympathetic shoulder through waived fees and relocation packages.
As 1998 slams its way into financial history books as the year of the bank merger, smaller institutions are courting customers through warm and fuzzy newspaper ads and radio spots.
Before giving the bank the heave-ho -- whether it's a case of moving to a new institution or new hometown -- customers should give themselves at least one-month lead time to make the transition to the new account.
The key is to start with your checkbook first. Balance it and make sure all outstanding checks have cleared before the account is closed. Getting a jump-start will ensure that the customer and bank agree on the amount of money due, and that bounced-check fees won't leave the account vulnerable.
A rule of thumb is to open a new account before closing the old account. That way, the flow of checks, ATM withdrawals and other transactions will be seamless. Also, make arrangements to stop direct deposit checks and benefits at least a month before the move. Jim Schepker, spokesman for Fleet Bank, suggests giving checks a full billing cycle to clear through the old account before closing it.
Automatic payment deductions such as mortgage or life insurance premiums should also be changed at least a month in advance.
While most banks can take new account information over the phone, it's safer to provide a new address and phone number in writing.
Remove all contents from the safe deposit box and return the keys. Finally, let family members know that your account is closed, so that heirs won't waste their time trying to recover "forgotten" money in an old bank account.
Some banks move to help you move
If you're planning to move to another city, some banks will court you with a relocation package. SunTrust Bank provides a 65-page guide, videotape, map and other perks to customers moving to Atlanta. Several hundred packages are mailed out each month, according to Sandy Christian, vice president and manager of the bank's relocation department.
Among the welcome goodies is a free checking account and safe deposit box for one year.
SunTrust recently ran a promotion courting new customers by offering account transfer assistance and waiving fees on six different checking accounts until 2000.
"We hand-hold our customers because it can be a tough transition if you're moving to another city and you get stuck without access to cash," Christian said. "I personally like to have money at both ends of the rope."
Unexpected moving snafus, such as the moving company only wanting a cashier's check, a grocery store that refuses to take an out-of-state check or a flat tire en route to the new home all make for instant-cash scenarios, Christian said.
"We recommend at least three weeks to get your new account set up -- that way, there's a strong possibility you'll have checks and a debit card in hand when you arrive in the new town," Christian said.
Big banks make out-of-town moves easier
Mergers between banks such as Bank of America and Nations Bank were intended to create coast-to-coast banking and ATM networks. With that in mind, most large banks don't rely on in-branch visits to close accounts. Customers can process their requests through the bank's telephone call center. But be forewarned: ask if there will be a charge for assistance or a fee for closing the account.
Last year, FirstUnion started implementing a $10 close-account fee but abruptly did away with the charge. Now, customers can transfer accounts within the bank's "footprint" or close an account for free, said spokeswoman Tara Bullock.
"The easiest way to make sure no checks will bounce on your old account is to have money set up in the new account, just in case," Bullock said. If a check bounces in the old account, the customer can ask that the fees be extracted from the new account.
NationsBank, however, charges a $10 fee if customers close a checking account within six months of opening it. The North Carolina-based bank recently completed a merger with Bank of America and now boasts 4,854 banking centers and 14,000 ATMs from California to the East Coast.
"The idea is we try to spend considerable time with the customer to identify the right kind of account for them, so this is a processing fee," said Jerri Franz, a NationsBank spokeswoman. "If you decide to switch to another bank product, there is not a fee."
Like many banks, Boston-based Fleet Bank introduced "borderless banking" two years ago so that customers can conduct transactions at any of the bank's 1,200 branches and 2,500 ATMs. "Each customer is recognized as a Fleet customer regardless of where they are (in the network)," said Fleet's Schepker. "They can cash checks, talk to the teller, and we have 1-800 telephone call centers, to put you in touch wherever you are."
Fleet's funds availability policy says the bank will clear local checks within two business days and non-local checks within three business days.
Financial institutions are required by law to post their policies on when money becomes available, including checks and deposit clearance.
Automatic payments can keep going and going
Under federal law, the customer must call or write the financial institution requesting a stop on automatic payments at least three days before the scheduled debit. If an oral request is made, the bank may require a written confirmation within 14 days of the initial phone call, said Robin Leonard, a consumer debt attorney and author of Money Troubles: Legal Strategies to Cope with Your Debt.
"The key is dealing with the business doing the automatic deduction," Leonard said. "You certainly start with the bank, but you've got to talk with your mortgage company. Surprisingly, we've heard it's been a nightmare for people who have joined the health clubs and have tried to stop the payments." 
-By Bank Rate Monitor for CNNfn
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