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.
While there are countless reasons why a consumer will choose to switch banks, these are some of the most common reasons.
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:
Do you know what your bank’s institution number is? Find out here.
Once you’ve committed to switching banks, you can follow the following steps to make the process as seamless as possible.
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.
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.
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.
When opening a new account, make sure you bring the following items:
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?
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.
The two most common and easiest ways to close an account with TD are:
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Depending on the type of account you have, there are three ways you can close an account with RBC:
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Consumers can close a CIBC account by:
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Depending on the type of account you have, you can close a Scotiabank account:
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To close an account with BMO you must visit your local branch. Certain accounts can be closed over the phone.
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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.
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Caitlin Wood is the Editor-in-Chief at Loans Canada and specializes in personal finance. She is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. Caitlin has covered various subjects such as debt, credit, and loans. Her work has been published on Zoocasa, GoDaddy, and deBanked. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security.
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