Closing your bank account and opening a new account elsewhere is typically considered a complicated and stressful process. Studies have shown that 20% of customers wishing to switch banks did not follow through on it because of the effort required. While your bank may do their best to retain you as a customer, it may make sense to move on sometimes – and doing so is easier than you think.
Common Reason Why Consumers Switch Banks
While there are countless reasons why a consumer will choose to switch banks, these are some of the most common reasons.
- Dissatisfaction with customer service
- Better interest rates for savings accounts
- Because of a move or relocation
- Because of a promotion or deal
- Better technology (for example, a budgeting app or online banking platform)
- Financial services/ products that are a better fit
- Lower fees
What To Look For In A New Bank?
If your current bank no longer suits your needs, make sure you do your research when evaluating new options. Banks typically offer several types of chequing and savings accounts with varying fees, requirements, and benefits. Some points to consider are:
- Minimum Balance. Some banks require their customers to keep a certain balance in order to waive monthly fees. Make sure you select an account with a minimum balance threshold that fits your monthly cash flows to avoid having to pay any unnecessary bank fees.
- Account Types. Each bank and financial institution will have its own suite of chequing and saving account types. Picking one that fits your financial habits and goals will allow you to bank efficiently.
- Fees and Interest Rates. Monthly fees, transaction fees, and interest rates vary from bank to bank. Doing a bit of research to select a bank that offers the highest interest rate with the lowest fees for the balance you typically hold will go a long way in helping you grow your savings.
- Branch and ATM Network. Depending on where you live, certain banks may have a higher branch presence and a stronger (no-fee) ATM network. This is especially important for those that typically do their banking in person rather than online.
- Mobile Banking and Online Platform. Some banks have more comprehensive mobile banking apps and online platforms than others. For those who typically do their banking on their phone or computer, make sure that the selected bank’s platform allows you to perform your frequent transactions online.
Do you know what your bank’s institution number is? Find out here.
How To Switch Bank Accounts?
Once you’ve committed to switching banks, you can follow the following steps to make the process as seamless as possible.
Open A New Bank Account
Before you close your current account, you should pick a new bank and open an account first. This will prevent any pre-authorized transactions and automatic deposits from being disrupted. If available, you should try to go into a physical branch and open your account with an account manager (instead of online or over the phone) as they will be able to directly answer any questions you may have and let you know about any special offers that you may qualify for.
Find out why it’s important to open a business bank account.
Begin The Transition
Once the new chequing account is open, you will need to transition over all of your recurring deposits and withdrawals. A good place to start is by reviewing your past bank statements – it also allows you to take a second look at any subscriptions you have been paying for that you no longer use. When reviewing old statements, it is usually a good idea to go over the past 12 months so you don’t miss any transactions that are billed annually.
After compiling a list of transactions that need to be transferred, you can make the necessary changes. This may include submitting your new banking information to your employer, contacting your subscription service providers to switch the payment account on file, and adding in all your payees for bill payments.
Check out how to set up automatic payments and automatic savings.
Closing Your Old Bank Account
After all your payments and deposits have been transitioned over to your new account and all transactions have cleared, it is time to close the old bank account. Make sure you review your bank’s policies on closing accounts, as some require you to do so in person while others will let you close the account online, via mail, or over the phone.
Even accounts that do not have a balance need to be formally closed – it will also give you the peace of mind that you are not being charged fees or overdraft interest on an account you no longer pay attention to. If there are funds in the account that you are looking to close, the bank will typically issue a check for the balance. In some cases, you may need to provide your bank with a formal request, in writing, if you wish to close your account. If there is a negative balance on the account, the bank will require you to pay the balance and any associated fees prior to closing the account.
What Documents Do You Need To Switch Banks?
When opening a new account, make sure you bring the following items:
- Photo ID – An official piece of photo identification such as your driver’s licence or passport.
- Social Insurance Number – Some banks require you to bring your physical SIN card while others simply need you to provide the SIN number.
After opening the account, you can ask the account representative or bank teller to provide you with the account details so you can submit it to your employer.
How to choose between Canada’s five major banks?
The Cost Of Closing An Account With Canada’s 5 Major Banks
If you’re concerned about the cost of switching banks or aren’t sure about the best way to get in contact with your bank, here is what you can expect when closing an account with Canada’s big 5.
How to Close an Account With TD
The two most common and easiest ways to close an account with TD are:
- In-person at your local branch
- Or over the phone (1-866-222-3456)
- There may be a $15 fee if TD transfers the money for you
- If you wish to switch to another TD account, you can do so through your online banking
How to Close an Account With RBC
Depending on the type of account you have, there are three ways you can close an account with RBC:
- In-person at your local branch
- Over the phone (1 800 769-2511)
- By sending a secure email through your online banking account
- It can take up to 5 business days for your account to be closed
- There is a $15 fee for closing an account between 16 and 90 days after opening it
- Fee is waived if you’re transferring the balance to another RBC account
How to Close an Account With CIBC
Consumers can close a CIBC account by:
- Visiting their local branch
- Over the phone (1-800-465-2422)
- Accounts that are closed within 90 days of opening will incur a $20 fee unless you are transferring the money to another CIBC account.
How to Close an Account With Scotiabank
Depending on the type of account you have, you can close a Scotiabank account:
- By visiting your local branch
- By calling 1-800-4-SCOTIA (1-800-472-6842)
- Accounts that are closed within 90 days of opening will incur a $20 fee
- You will be charged a $20 fee if Scotiabank transfers your money for you to another institution
How to Close an Account With BMO
To close an account with BMO you must visit your local branch. Certain accounts can be closed over the phone.
- Accounts that are closed with 90 days of opening will incur a $20 fee
- BMO charges a $20 fee to transfer your money to another institution
While switching banks is often considered a stressful process, it doesn’t need to be if you follow the above steps and do your due diligence. The most important thing you can do is get in contact with both your current bank and the bank you wish to switch to. Having a full understanding of any potential issues or fees that could arise from transferring your money, will make the process as smooth as possible.