How Much Work is it to Switch Banks

by Jordan Lavin November 22, 2018 / No Comments

In the United Kingdom, switching banks is incredibly easy. The Current Account Switch Service (chequing accounts are known as current accounts in the UK) is a free service that automatically closes your old account, moves your balance, and moves over your pre-authorized payments. Over 40 financial institutions participate in the program, and the service claims to have helped switch over 4-million accounts.

Here in Canada, it’s not quite so simple. Not only do we lack a national service that automates the process of moving to a new chequing account, but the banks that have offered such a service on their own have recently stopped doing so. Earlier in 2018, Tangerine confirmed on Twitter that it would no longer offer its switch assistant program. RBC did the same.

The last Big Five holdout offering a chequing account switch service is BMO, whose PowerSwitch service is still advertised on its website. BMO’s service isn’t completely automated, however, and still requires you to do a lot of the legwork.

The next best help comes from programs like CIBC’s switch kit, which is no more than a PDF checklist and form you can manually fill out to instruct your billers to change your payment information.

The banks taking away these services makes it more difficult to switch to a new chequing account, but that shouldn’t stop you from doing so. Over time, your financial situation changes. You might make more or less money, take on different bills, or change the frequency with which you use cash, cheques or e-transfers. Since chequing account fees are based directly on how you use the account, there’s a good chance that you could find an account that’s better suited to your current habits than the one you use today – especially if you’ve had your chequing account for more than a few years.

Even though it’s a bit of work, switching chequing accounts could save you a lot of money. Switching from a big bank’s premium account to a no-fee chequing account, for example, could save you up to $360 per year. It’s well worth the effort.

Here are the steps to switch to a new chequing account:

1. Compare chequing accounts

The first step in the process is to compare chequing accounts online and find the right account for you. Do this by looking at each chequing account’s total monthly cost – that’s the monthly fee plus any transaction fees you’ll incur. You might find that an account with a higher monthly fee might actually cost you less because it includes the kinds of transactions other accounts charge for à la carte. Don’t forget to consider other services that might be important to you, like access to a large network of ATMs or in-person service at a branch.

2. Open an account online

When you’ve found the chequing account that meets your needs, you can open a bank account online. Most banks offer a simple online form that can be filled out in just a few minutes. You might need to provide some personal information such as your social insurance number (SIN). Some banks also ask for authorization to perform a credit check. In some circumstances, you may need to visit a branch to complete your application in person.

3. Change over your payroll and pre-authorized payments

This is the trickiest step, and it’s the one that’s no longer automated in Canada.
Start by contacting your employer and moving your payroll to your new chequing account. If you have income from other sources, make sure your banking information is updated there as well. Common income sources include retirement income (e.g. from an RRSP, RIF, OAS, CPP or QPP), payments from the government (e.g. from employment insurance, disability or welfare), child support payments and royalty payments.

Start by making a list of all the pre-authorized payments that come out of your existing bank account. Take a look through your last year’s worth of statements to make sure you don’t miss any. Common pre-authorized payments include your rent or mortgage, utilities, car payments, insurance, contributions to savings, memberships and subscriptions. Contact each of the billing companies and give them your new bank account information. Most companies allow you to change your pre-authorized payment information over the phone or through their online portal.

If you’ve handed out any postdated cheques, this is a good time to call them back and issue replacements from your new account.

Once your payments are all moved over transfer the funds from your old chequing account to your new one, leaving behind a little bit just in case one last surprise charge hits your old account. Once you’re satisfied that your old account won’t be charged any more, transfer the last of the money over and close the account.

4. Stay on top of your chequing habits

Inertia is a powerful force. If you let it win, the account you choose today could be the one you use for decades. But just as your needs have changed in the past, they will again. Keep an eye on your own trends in how you use your chequing account and make a change if you notice you’re not using all the features you chose your new account for.

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Photo by Kat Yukawa on Unsplash