How to Switch to a New Bank or Credit Union in Canada
Many of us start out with all of our finances at one bank. But as life goes on and you become more financially savvy or move to a new place, you may consider 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 thinking of moving to a new financial institution, make sure you weigh your options, consider the benefits, and work out a plan for a smooth transition.
What to consider before switching banks
Before you switch banks, ask yourself why.
There are plenty of good reasons to transfer, such as moving to a new city where your bank doesn’t have any branches or consolidating all your accounts under one roof.
Perhaps you’re unhappy with the service, or your bank’s financial products and services no longer suit your needs. Or perhaps you’re frustrated by the fees your bank charges or the minimum balances or other criteria to get them waived. Or maybe you want to join a local credit union that supports organizations in your community.
Consider the reasons you’re thinking of switching banks, and then research the following aspects of any potential new institutions.
Ways to bank
Traditionally, banks or credit unions have had widely available branch and ATM networks, making them ideal for those who prefer using in-person services and ATMs.
However, online banks can be a perfect choice for people who like to manage their financial transactions online. Because they don’t operate brick-and-mortar branches, online-only banks often charge lower account fees (or none at all). They typically partner with another institution to offer access to an ATM network.
Whether you value teller-assisted banking, a robust online service or 24/7 phone support, comparing customer satisfaction ratings on bank reviews can help guide your decision.
Fees and limits
When comparing chequing accounts with a lower monthly fee or free unlimited transactions, pay attention to what’s included. Some low- or no-fee bank accounts might charge extra fees for things like overdraft protection or more than a certain number of transactions. That could mean paying a monthly fee for an account with more features or transactions is a better deal in the long run.
Promotional offers
Banks use introductory offers to get new customers. High bonus interest rates on new savings accounts can be a draw for people with short-term savings goals. Similarly, chequing account offers, such as cash bonuses or free gifts, could compel you to switch banks. It’s important to compare the temporary gains versus the long-term benefits the move might provide.
If you’re happy with your current bank but see a better deal elsewhere, it’s worth getting in touch with your bank representative to ask if they can match it. Even if they can’t perfectly match the offer, they may be able to offer you a discount or a slightly better rate to keep your business. This strategy can be especially effective if you have multiple products and accounts with your bank.
How to switch to a new bank or credit union
If you decide that you want to switch banks, take the time to research your options and find the best fit for your current needs. When you’re ready to take the leap, follow these steps:
Create a master list of bills and direct deposits that you’ll need to transfer to your new bank account. Don’t forget annual payments like property taxes and income tax refunds.
Open an account at your new bank or credit union. You may be able to open an account online, or you may need to visit a branch. Then transfer most of your funds to your new account, leaving a little behind just in case.
Change your work direct deposit information so your paycheques come to your new account.Then use your master list to guide you as you update other direct deposit payment and automatic bill payment information.
Use your new account for a couple of months, and keep an eye on your old account, just in case. If you don’t see any transactions in your old account after a few statement periods, you can transfer the rest of your funds to your new account. Make sure the balance of your old account is $0; you cannot close a bank account that’s in overdraft.
Close your old account. Your bank account will not close on its own; you’ll need to contact the bank to ask them to close the account and check if there’s a closing fee. Before you leave, you should ask the bank for a document stating the account is closed — just in case.
Enjoy using your new bank account and getting to know your new bank.
Frequently asked questions
What documents do I need to switch banks?
When you switch banks, you’ll have to prove your identity to the new bank before you open a bank account. You’ll need two types of valid IDs, such as a Canadian driver’s licence or a passport. Depending on the type of account you’re opening, the bank may also ask for your social insurance number (SIN).
Are there any fees for switching banks?
It depends on the bank and the type of account. Your bank might charge a transfer fee when you move a registered retirement savings plan (RRSP) or tax-free savings account (TFSA) to a new financial institution. However, your new bank may offer to cover those fees, so it’s worth checking. There’s usually no fee to close an old bank account with a $0 balance but it’s best to confirm with the bank beforehand, as some banks may charge a fee for closing accounts in certain ways.
DIVE EVEN DEEPER
Siddhi Bagwe
Siddhi Bagwe