Rounding it up
If you’re not happy with your current bank, it might be worth moving your account elsewhere.
Before you switch banks, be sure to double-check if there are any fees that you’ll be charged for transferring your assets to another institution and closing your account.
If you receive your paycheque via direct deposit, contact HR at your workplace to update your payment information as soon as possible after switching banks.
You’ll need to update your banking information with any companies that make direct debits from your old bank account, such as your mortgage lender or phone company. That way, you can continue to make your payments on time from your account at your new financial institution.
Want to leave banks behind altogether? Come join us at KOHO! We have everything you need and then some, especially when compared to boring ol’ traditional banks.
Change is uncomfortable. Whether it's moving, starting a new job, or even switching to a new pilates instructor, humans are just far more comfortable when things stay the same. However, sometimes a change is necessary, and, in these situations, embracing that change can be the most powerful thing you can do.
This is equally true when you’re thinking about changing banks.
Everyone needs a good banking relationship because having a reliable financial institution helps you feel comfortable about where you’re keeping your hard-earned dough. This means that sometimes, the right thing to do may be to change banks.
So how easy is it to change financial institutions? Is there anything you need to know before you switch banks? We’ll take a look at a few things you need to keep in mind before changing banks in Canada in this article.
Reasons to switch banks in Canada
We all know the old saying “if it ain’t broke don’t fix it.” But sometimes your relationship with your bank is broken and there’s something better out there that’s more suitable for your needs.
Even if you aren’t overly unhappy with your bank, there may be other reasons why switching up financial institutions is worthwhile. These include:
Location – Most Canadians have accounts with one of the Big 5 Banks, which all have branches in locations across the country. In these situations, the bank’s physical locations may not matter much to you. But if you’re using a credit union or smaller bank, you might want to consider where your nearest branch is located. On the off chance that you need to go to a bank branch, it can be helpful to have one located nearby.
Available Services – Some banks are better at providing certain products to certain kinds of account holders. If you’re using a large, multinational bank but are interested in a business loan in small-town Saskatchewan, it may be better to go with a local bank that understands the needs of your community. They’ll have a better idea of the local economy and likely, superior customer service. Moreover, you’ll be supporting local businesses, so it’s a win-win for everyone.
Travel Benefits – If you travel quite a bit, either around Canada or internationally, banking with your small, local bank might not work so well in the long term. Larger banks tend to have more branches in more places. They also tend to have agreements with other banks overseas. This can help you get lower fees and it can make your life generally much easier while you travel.
Fees & Interest Rates – Probably the biggest reason to switch banks is to get better fees and interest rates for your account. Moreover, if you have your mortgage or loan with a bank, it may make sense to switch your other products to that institution, too. Some banks or credit unions will even offer a discount on fees for customers with multiple accounts.
Are there fees to switch banks in Canada?
Sometimes! This depends a lot on the type of account you’re moving and what banks you currently have a relationship with.
Most banks won’t charge you a fee to open an account (but always double-check the fine print). But some banks will charge a withdrawal fee—especially if you’re trying to transfer a Registered Retirement Savings Plan (RRSP) to a different institution.
In some cases, your new financial institution will offer to cover these fees in order to encourage you to do business with their bank. Be sure you have a clear understanding of the fees associated with leaving your current bank and joining a new one, including any monthly fees that you might be liable for.
What do I have to do to switch banks in Canada? Is it easy to do?
In short, it’s easy to switch banks in Canada if you do some work on the front end. Switching banks can be a frustrating process if you’re not prepared, so being proactive can seriously help you out.
The exact steps you’ll take to switch banks will depend on your financial institution. But here are some of the basic steps you’ll typically take when transferring your money to a new bank in Canada.
Define your reasoning for switching
First things first: ask yourself why you want to switch banks and what you don’t like about your current banking relationship. There’s nothing worse than doing all of this work to switch banks only to find that the same old pain points exist with the new bank too.
Once you know what you don’t like about your bank, think about some of the things you do want at the new bank.
Consider the types of accounts the bank has as well as other services like mortgages, auto loans, and RRSPs. Does your new bank have an app with good reviews? How about an ATM network for cash? Does it seem like they have locations in your area?
The most important thing to consider, though, before switching banks is the fees.
Canadian banks often charge fees for having chequing accounts and savings accounts or for certain account features. You need to decide what fees make sense in your life and which ones are best avoided.
For example, if you find that you use ATMs quite a bit, you’ll want to look for a bank with an account that covers ATM withdrawals. Or, if you frequently move money around between accounts, you may want to search for a bank that offers free funds transfers.
Do a personal account audit
Your bank account is more than just a pool of money sitting idly. In fact, you likely have money entering and leaving your account multiple times in any given week.
Whether it's a direct deposit from your employer, deposits from an ATM, or withdrawals to pay your bills, your account is constantly being asked to do different things. You need to ensure that you have a good handle on all of those regular transactions before you switch banks. Thankfully, you can do so by completing a personal account audit.
To do a personal account audit, sit down with your last two or three months’ worth of bank statements and highlight each and every automated transaction. This could include your paycheque or automatic transfers that you make to your landlord for rent.
No matter what the transaction is, note it down so that you can update your payment details with your new bank account’s information once it’s up and running.
Gather your documents
When you’re switching banks, the new financial institution needs to do its due diligence to ensure that you are who you say you are.
You may need to supply proof of identification (like a driver’s license) in order to open a bank account. A bank is also likely to ask you to prove where you live by producing a utility bill or something with your address and name listed on it.
Depending on the kind of account that you want to open, you might also need to show your social insurance card. If you’re joining a credit union, you may need to bring proof that you are a member of the population that the credit union represents or you won’t be able to open an account.
Prepare for the split
It's time! You can finally head to your new bank and open up your account, either online or in a physical branch.
Note that you will need to provide an initial deposit to open most bank accounts. It’s important to plan for this because, not only will you have to provide an initial infusion of cash, but you’ll also need to have two accounts for at least a short period of time.
This means you’ll need to be able to manage to pay bills and keep cash in two places while you finalize your account transfer. The last thing you want is to move everything over to your new bank account only to see a debit in your old account that ends up costing you overdraft fees.
Therefore, it’s normally best not to completely withdraw all the funds from your old account until you’ve switched over all your payment information to your new financial institution.
Close your old account
After a few months of having your new account up and running, you can think about closing your old account.
Keep in mind that your old bank might charge an account closure fee. You also want to double-check to ensure that you don’t have any upcoming payments or deposits scheduled for your old account before you shut it down.
But once you’re confident that your old account is no longer needed, you can go ahead and close it. Huzzah! You’ve officially switched banks.
Here’s another option: forget banks all together
The internet is a great place. It allows you to watch anything you want, read news about any topic and, of course, do a bunch of banking. However, there are some financial services companies that do the internet slightly better than others.
That’s where KOHO comes into the picture. Created with the digital-first consumer in mind, KOHO boasts modern accounts with excellent features, all of which are powered by a gorgeous mobile app.
Let's think about the questions we asked above and see how KOHO stacks up. Need quick access to lots of ATMs where you can get cash? KOHO has you covered there with support for a huge network of ATMs. Extra account holders even get one free international ATM withdrawal each month.
Want quick and easy access to all of your financial tools? KOHO is ready to help. Plus, you know one thing that KOHO has but traditional banks don’t offer? Rewards!
Yep, that’s right. You can earn 1% cash back on groceries and transportation on KOHO Easy. That’s money that can go right back into your pocket.
And another thing that KOHO offers? Credit building tools.
Perhaps you’ve done some damage to your credit or need to build a credit history in the first place. In any case, KOHO’s Credit Building tool allows you, for just $10 a month, to methodically rebuild your credit history, so long as you make on-time payments. Sounds awesome to us!
Changing banks in Canada doesn’t have to be a hassle
Switching banks is easy to do as long as you do your homework on the front end. If you decide willy-nilly to swap banks, even to KOHO, you’re going to have a hard time managing everything and you could get hit with some unexpected fees from your financial institutions.
Therefore, make sure you understand any fees associated with switching banks before you start opening new accounts. Always do a full audit of your accounts and payment schedules, too, so you can transfer all your information to your new bank with minimal hassle.
Dan is a runner and writer living in the Washington, D.C. area, where he currently works for a financial services trade association as the Communications Director.