Most of us start out with all of our finances at one bank. Often, it’s the one our parents used or one that’s conveniently close to home. But as life goes on and you become more financially savvy or move away from home, you may consider the idea of switching banks.
Looking for a new bank takes a bit of work, and you may wind up deciding to stay put after all. But if you’re considering moving to a new financial home, here’s what you need to know about how to switch banks.
Before you consider switching banks, ask yourself why. There are plenty of good reasons for switching, such as moving to a new city where your bank doesn’t have any branches. Perhaps you’re unhappy with the service, or your bank’s financial products no longer suit your needs, or you’d prefer to use a local credit union.
One of the main reasons people switch banks is to find better fees and interest rates. With so much variation between banks, it’s definitely worth shopping around to find the best offers. However, it’s important to keep in mind that many banks offer excellent “teaser” rates to get new customers, but these rates are temporary. For example, Tangerine offers new customers an interest rate of 2.10% on savings, but only for five months. After that time is up, the regular rate is only 0.10%.
Similarly, when you’re considering switching to a chequing account with a lower monthly fee, pay attention to what’s included. More expensive accounts might actually end up being a better deal in the long run because they include more features, whereas a cheaper account might charge extra fees for things like overdraft protection and e-transfers.
If you’re happy with your current bank but see a better deal or rate advertised elsewhere, it could be worth getting in touch with a bank representative to ask if they can match it. Even if they can’t match exactly what another financial institution is offering, they may be able to offer you a discount or a slightly better rate. This strategy can be especially effective if you have multiple products and accounts with your bank since it will want to keep your business.
When you switch banks, you’re essentially starting fresh, and you’ll need to prove your identity to the new bank when you open a new bank account. You’ll need to bring two types of identification, such as a driver’s license or a provincial health insurance card. Depending on the type of account you’re opening, you may also need your social insurance number (SIN) card.
It depends on the bank and the type of account. Your bank might charge a transfer fee when you move your money to a new financial institution, particularly if you’re transferring a Registered Retirement Savings Plan (RRSP) or Tax-Free Savings Account (TFSA). However, sometimes your new bank will offer to cover those fees, so it’s worth reading the fine print. Also, if you decide to close your old bank account, you may be charged a closing fee.
If you decide that you’re ready to switch banks, follow these steps:
Hannah Logan is a writer and blogger who specializes in personal finance and travel. You can follow her personal travel blog EatSleepBreatheTravel.com or find her on Instagram @hannahlogan21.