The term Big Five says it all: When it comes to banking, Canadians don’t have much choice. If your current chequing account is your first and only, you’re among friends — a large number of respondents in Ratehub.ca’s 2017 Digital Money Trends Report said they’ve held the same bank account for about half their life. The survey also found Canadians are very loyal to their primary bank, even though they don’t believe they’re getting the best rates on any financial products.
I can relate. Until December, I had the same chequing account for roughly 17 years. I opened it at one of the big banks for a simple reason: My parents banked there too. I thought about switching banks for years as the monthly account fee gradually climbed, but never got around to making a move. This financial Stockholm syndrome is rooted in a mix of complacency in the familiar, procrastination, or feeling like all big banks (and bank accounts) are the same anyway. Anecdotally, you’d be hard pressed to find many people who diligently reevaluate and switch bank accounts every few years.
Ultimately, it was fees that broke camel’s back. By the end of 2017, I was paying $13.95 every month ($167.40 a year) for what was essentially a self-managed online account — more than my Netflix subscription, but without the benefit of streaming the Queer Eye reboot. Seeing that number on paper (and feeling a twinge of shame, considering I work for a rate comparison site) was the kick I needed to find a better chequing account.
Part of the reason I procrastinated so long is because I thought it would be difficult and time consuming, but reader, it was insanely easy. All in, we’re talking about an hour or two of your time to upgrade and save money on an account you use every single day. If you’re reevaluating your current account and thinking of making a switch, here’s how to do it smoothly.
When to switch, and what to consider
If your current account charges a monthly fee, audit exactly what you get out of it in terms of the number of included transactions (self serve, teller assisted, cheque), number and location of branches and ATMs, and charges for Interac e-Transfers, cheques, and bank drafts. Compare this to what features you actually use. Many accounts waive the monthly fee if you maintain a daily minimum balance, but than can range from $2,500-$5,000 — not exactly a small chunk of change to just have sitting around.
The best time to switch is when you find a better deal. Compare the best chequing accounts from banks and credit unions to find the one that best suits your needs for the lowest monthly fee.
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Open your new account first
Since I do all of my banking online, I chose the Tangerine no fee daily chequing account, which has unlimited transactions, no monthly fee, and provides access to Scotiabank ATMs. The Simplii Financial no fee chequing account has similar features and piggybacks on CIBC ATMs. It’s easy to sign up for any account online, but depending on the financial institution you may have to visit a branch to sign papers. To open the Tangerine account I signed up online, verified my identification at a Canada Post outlet by my apartment, set up my online/mobile login, and received my debit card in the mail.
Transfer your account balance and auto-payments
Make a list of any monthly, annual, or sporadic automatic payments linked to your current chequing account. This includes loan payments, gym or other memberships, utility bills, or insurance premiums. Most importantly, don’t forget any direct deposits such as payroll. When your new account is up and running, go through your list and switch each payment.
Depending on the timing and how many auto-payments you have, you may need to keep your old account open for another month to protect against bounced payments or overdrafts. In this case, you’ll want to leave enough cash in the old account to cover any leftover auto-withdrawals and the monthly fee. However, you can move the bulk of your everyday funds to the new account.
Close down your old account and slowly walk away from the explosions
Note that you’ll have to clear any overdrafts or outstanding fees before the bank will close your account. But as long as your account is in good standing, this is arguably the easiest part. Go to your local bank branch teller with at two accepted pieces of identification (at least one should have your address) and tell them you’d like to close your account. Depending on how far you live from your local branch and how busy it is, it shouldn’t take too long. The teller will withdraw the last monthly fee, refund you the remainder of the account’s balance in cash, and have you sign a document confirming the account’s closure.
The bottom line
I’ll admit I felt weirdly sentimental about closing my first bank account. However, not sentimental enough to continue forking over $167 a year. Switching bank accounts is one of those tasks that seems arduous, but is actually a fairly easy housekeeping task you’ll wish you did sooner.
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