If you’ve dreamt about better interest rates, flexible branch hours, points perks or customer service reps that actually serve, now’s the time to quit your bank. You may even find new and better account options that didn’t exist a few years ago. And it’s actually easier than you may think. Here’s how to do it.
1. Open a new account, and arrange to get cheques and online banking:
According to Laurie Campbell, CEO of Credit Canada Debt Solutions, families who switch gravitate to low-fee credit unions, which charge a flat rate for unlimited monthly transactions, or no-fee banks such as ING Direct and President’s Choice Financial.
Decide which perks are important to you, and compare banks that feature your top picks. For instance, some offer free overdraft protection, which helps shield you from hefty charges if you’re ever caught without sufficient funds in your account to complete a transaction.
Then, read the fine print: After a honeymoon period, some banks may introduce fees. And make sure your new bank is a member of the Canada Deposit Insurance Corporation, a Crown corporation that protects your deposits in case the institution fails.
Gail Vaz-Oxlade, a personal finance writer and host of TV’s Til Debt Do Us Part, suggests keeping deposit and credit products at different banks as a safety measure — keeping your eggs in different baskets, so to speak. “If you default on your line of credit (and it’s at the same institution as your savings) they could withdraw from your accounts,” says the author of Money Smart Kids.
2. Switch deposits to the new account:
Ask your employer to transfer your direct deposit paycheque (it may take two to four weeks) and request the same for government deposits.
3. E-connect your old and new accounts:
This allows easy fund transfers when you’re juggling two accounts.
4. List all your transactions:
Review last month’s bank statement and use our checklist to track all bills and automatic payments. This helps ensure you have enough money in each account as you transition. Include any post-dated cheques you’ve written for piano lessons or hockey fees.
5. Move payments over:
As each bill comes due, notify the biller or switch the payment via online banking, then record it on the checklist. Or have the bank do the heavy lifting: Top financial institutions offer free account-switching services, or at least kits to walk you through the process. And don’t worry if your mortgage is with one bank and your accounts are with another: You can still make payments from the new account.
6. Close the old account:
Vaz-Oxlade suggests monitoring both accounts for a month or two; if you close too soon and forget an outstanding cheque or payment, you’ll pay a penalty. Once the old account has been quiet for 30 days, it’s safe to pull the plug.
A version of this article appeared in our August issue with the headline “Make change,” p. 42.
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