It’s probably time you switched banks—4 easy steps for Canadians

As you establish yourself financially, it’s worth asking whether your bank still suits your current lifestyle. A lot has changed in your life since you opened your first account—or your parents opened it for you. So how do you know when it’s time to switch to another financial institution? 

How to know when it’s time to switch banks

How do you know when enough is enough and it’s time to move on? For starters, it’s always good to research what the competition is offering. Big banks and online banks sometimes have special welcome offers or incentives to switch, such as bonus points or cash rewards. That alone may be worth your while. 

Long term, making the switch can help you save on account fees, gain access to different financial products, receive better financial advice or get a fuller picture of your finances (if, say, the institution has a financial app that offers insights into your spending.) 

Is your bank still meeting your needs? Questions to ask yourself

To help you decide whether your financial institution is still serving you well, consider every aspect of the relationship, including customer service, fees, advice, and the security of your money and personal information. Here’s a list of questions to give you some perspective on if it’s time to break up and find a new bank. 

1. Do you still need access to a local brick-and-mortar bank, and are the hours convenient for you? Or is doing everything online enough for you? 
2. How’s the customer service experience? (Look at how the bank staff has dealt with you in person, on the phone and through online chat. Recall if you’ve been frustrated with wait times and resolutions.) 
3. Are its different product lines enough for you? Some banks will bundle services for lower fees or discounts. Call up your bank and ask if they have such programs, if you’re not already partaking.
4. Speaking of products and services: Does the institution offer joint bank accounts you could share with a sibling, roommate or significant other? 
5. Could you be paying lower fees? This one involves a bit of shopping around, looking at costs like one-time charges or monthly bank account fees.
6. Do you trust the people who are giving you advice? For example, for investments and life insurance, the advisors may only be offering you products they sell. Even if you don’t fully break up, you may want to pick and choose services based on what makes sense for you.
7. How secure is the institution? Find out if it is a member of the Canada Deposit Insurance Corporation (CDIC), and ensure that it treats and protects clients’ personal information from situations like cyber-security incidents and fraud. 

As you go through the list of questions above, assess whether you’re happy with your current bank or if you should consider switching to a different one. 

Combining finances with another person

Moving your accounts to a new home may also be beneficial if you’re in a relationship or want to combine your finances with another person. 

My husband and I are customers of two different Canadian banks. Whenever we go into a branch or speak with our banks on the phone, we see stark contrasts between the customer service we receive. Plus, we have found that having our accounts spread between different banks makes it more challenging to move money around and see our full financial picture. So, if you’re in a similar situation, take the opportunity to visit both banks to see how they stack up against one another. You may be surprised to see what the similarities and differences are.

Maintaining accounts at a different institution than your significant other or sibling can make it more difficult to monitor or manage your finances together. Bringing them under one institution can help you enjoy all the benefits discussed above and get a pulse on how your financial situation looks under one umbrella. It can reduce the need to remember multiple log-in credentials or to move money around using bank drafts and Interac e-Transfers. 

Of course, you can always shop around, compare products of more than two banks. Here are some MoneySense tools and rankings worth considering (which are updated regularly, so check back when you think it’s time for a change):

• The best banks in Canada
• The best credit cards in Canada
• The best chequing accounts in Canada
• The best savings accounts in Canada
• The best high-interest savings accounts in Canada
• The best mortgage rates in Canada
• The best rewards debit cards in Canada
• The best student credit cards in Canada
• The best RRSP rates in Canada
• The best FHSAs in Canada
• The best TFSAs in Canada
• The best robo-advisors in Canada

How to switch banks in 4 simple steps

Kudos for going through the initial exercise to assess your current situation and understand the benefits of making the transition to another bank. If you’re ready to make the move, we’ll show you how easy it is to switch banks in Canada.

Step 1: Open an account with the new financial institution

To open a new bank account, depending on which bank you choose, you can either apply online, make a phone call or visit a branch. You’ll need to have photo identification (such as a driver’s license or passport), your SIN card, proof of address and your contact information. 

If you’re currently in school, you can apply for a student bank account online. However, some banks may ask for your student card, an acceptance letter or proof of your graduation date. 

What’s more, some banks require a deposit into the new bank account. So, be sure to have funds that you can transfer over or have a cheque that you can deposit. 

Step 2: Transfer money to your new account 

The next step is to transfer all your money from your old bank account to your new one. If you have small amounts to move, you could send Interac e-Transfers to yourself, although there may be daily and weekly limits on how much you can transfer this way. If you have a large amount of money, it may be easier to visit or call your existing bank and ask to have it all transferred in one shot.

Step 3: Set up direct deposits and bill payments 

Make a list of all the direct deposits you have set up with your existing bank account. This way you can notify your employer (or clients, if you are self-employed) of your new direct deposit information so you won’t have any interruptions when receiving payments. 

For bill payments, take a look at your directory of payees. Determine which ones you want to save going forward. This could include your cell phone company, utilities or credit card provider. Repeat this process for your directory of payees that you’ve sent e-transfers to in the past.

If you have automated transfers between accounts set up (such as transferring money from your chequing account to your savings account every two weeks), make a note of it so you can set it up with your new bank account. 

Step 4: Close your bank account

Before you close your bank account, it’s wise to wait several weeks to ensure that all your deposits and bill payments have been set up properly with your new institution—you do not want a cheque to bounce or miss a payment. Depending on your bank, there are several ways you can close your account. You may be able to close it online, or you may have to make a phone call or visit a branch. Be sure to bring ID with you if you are making an in-person appointment to verify your identity. 

Take note that you may be subject to various fees, including:

• A closing fee
• A fee to transfer your money to another institution
• An inactivity fee (e.g. if your account has been dormant for over a year)
• A non-sufficient funds fee or overdraft fees

It doesn’t hurt to ask the bank to waive these fees for you.

Pro tip: If you have a credit card with your existing bank and if you pay an annual fee, you can always downgrade to a no-fee credit card and keep it dormant. You likely wouldn’t want to cancel the card, especially if you’ve had it a long time, since that could negatively impact your credit score.

So, should you switch banks? 

After you’ve done some research, if you feel like your current bank still suits your lifestyle, then that’s great. You can always call to negotiate a better offer, such as lowering your monthly fees or getting a better rate on your high-interest savings account. 

If you feel like the grass may be greener on the other side, then doing the upfront paperwork will help improve your overall satisfaction in the long run. Not only will it help you to save on fees, but you may also receive better customer service, have access to more products and get the advice you need from your financial situation. By taking the time to switch now, you’ll be able to reap the benefits for many years to come. Maybe one day your kids will enjoy them too!

Read more Making It:

• What to look for in your first job after graduation—besides a good salary

• How to take a gap year trip without breaking the bank
• First home savings account: A Gen Z guide to achieving home ownership
• How to survive a recession: Six tips for Gen Z and those who haven’t faced one before

About Sandy Yong

Sandy Yong is a personal finance writer, TEDx and Keynote speaker, and the award-winning author of The Money Master. She’s been featured in hundreds of media outlets including CTV News, Global News, Forbes, The Globe and Mail and The Toronto Star.

Linkedin Twitter Facebook Website