When it comes to banking services in Canada, Canadians have a variety of very reliable options available to them. While some banks offer in-branch banking services, others provide strictly online banking. Some financial institutions, on the other hand, combine both online services and in-branch banking to cater to their customers’ banking needs.
Given the diverse options of banks in Canada, it is essential to ascertain that your preferred financial institution serves the complete purpose of safeguarding your valuables and offer great perks while at it. Some banks offer desirable interest rates, which on its own, is an attractive factor to saving with such a bank. Some allow their customers to access amazingly low-interest loans with which they can run their businesses.
There are just so many reasons you may want to switch from one bank to another in Canada. We’ll provide a detailed breakdown of how to go about this process for whatever reason you might want to switch banks.
How to Switch Banks – How Easy is it?
Switching between different banks in Canada is no hard process; however, it requires some strategic moves to propel the smooth transition from one financial institution to another.
The following step-by-step guide shows how you (or anyone) can have a successful transition from one bank to another in Canada.
Step 1: Recognize the Lapses of Your Old Bank
If things are perfect with the Canadian bank with which you transact, there may be no need to switch to another bank. However, in many cases, because clients are unsatisfied with the offerings of their current bank, they run to other banks. It’s possible that you’re unhappy with what your bank offers you especially in comparison with another bank.
Recognizing this factor will help you avoid any other banks in Canada with similar or even worse lapses. Some banks provide low interest rates on savings, while others have excessive charges and fees. Whatever the case may be, you need to be sure of exactly what you don’t like about your current bank and what the best alternatives are.
Step 2: Compile a List of Banks That Meet Your Current Criteria
Because of the number of banks in Canada, there are always substitutes available for one bank’s lapses. The next strategic move to switching your bank account in Canada is iterating a list of banks that meet your current criteria (or criterion as the case may apply).
Now, depending on your criteria, there may be more than one bank on this list, so you might be faced with the dilemma of choosing between two or more good options. However, the solution is to go for the one that tops your list in the order of hierarchy.
In compiling this list, however, you may need to visit a local bank directory to find out about the services and offerings of a particular bank. You could also check the internet as most Canadian banks have great internet presence.
You can choose from any of the three types of banking institutions:
- Traditional Banks
Traditional banks are brick and mortar financial institutions, usually associated with high transaction fees and other charges. They offer all-round financial services to customers. They include big banks such as TD Bank, Scotiabank, Royal Bank of Canada, etc.
- Credit Unions
A credit union is a nonprofit financial institution controlled by its members (the people who deposit money into it) and offer favourable interest rates compared to traditional banks.
- Online Banks
Online banks are branchless banks that offer high-interest rates and low fees on savings, chequing, and investment accounts. Two popular choices are EQ Bank and Tangerine.
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Open a Bank Account Online with EQ Bank
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Step 3: Open an Account with Your New Bank of Choice
Transitioning between banks in Canada requires some strategy, which is why the steps in this article follow in a progressive manner.
The next step to transitioning your bank account in Canada is to open a new bank account with your bank of choice. Opening accounts vary from bank to bank. You can choose to open a Savings account, Chequing account, or registered accounts, depending on your banking choice and goals. However, there are certain universal requirements to opening a bank account in Canada.
First on the list of these universal requirements is a means of identification. Most banks will require that you provide a photo identity card such as a driver’s license or passport. This ensures that the bank complies with the KYC (Know Your Customer) policy guiding Canada’s financial institutions. The means of identification will also guard against money laundering, in compliance with the AML (Anti Money Laundering) policy.
Asides from your means of identification, your Social Insurance Number (SIN) will be required. Some banks require that you come along with your Social Insurance Number card for your account opening to take effect.
Step 4: Transfer Your Funds and Close Your Old Bank Account
The next step to switching your Canadian financial institution is getting your funds into your new bank account. To do this, there are two ways to go about it depending on you and probably your old Canadian financial institution.
The first way is quite simple and direct; you could walk into your old bank and withdraw all your funds. This is perhaps the most direct way of funding your new account. After making the withdrawal from your old account, you can then pay the money into your new Canadian bank account. While this is simple and straightforward, it carries some risks.
The other method of funding your new Canadian account is to ask your old bank to transfer all your funds to your new bank account and close your old account. This is perhaps the most hassle-free way to switch your bank account and transfer your funds.
The old bank does all of the hard work for you; all you need is to confirm when the money gets into your new account. However, some banks might ask for a token to effect this transfer (between $10 and $30) depending on the bank and the amount of money you have with them.
You might be faced with some insignificant hassle using the second method to close a Canadian bank account because the money may take a few days before it reflects in your new account. Some banks take three days to process; some take five and others even more. Basically, what this means is that if you need your money immediately, you might want to opt for the first option of funding your new Canadian account.
Step 5: Check and Confirm Your Auto Payment and Deposits
Another factor you might want to consider in closing your old Canadian bank account is that there may be some cases where friends, family or even business associates pay into your account without your knowledge. For those who may not know that you have closed your account, they may go to your old bank and make this lodgement into your old account.
This is why it is necessary to officially notify your old bank that you no longer wish to run an account with them. Once this is done, the bank should notify you if there are any lodgements within a specified number of days after closing the account with them.
Alternatively, you can check on your old bank, probably after a month of account closure, to ascertain if the account is closed. The reason for this is that some banks reopen closed accounts when there is a lodgement or auto-deposit.
If you’re not satisfied with your current bank services and fees or how the bank manages your money, you can switch to other Canadian banks of your choice. Some banks charge fees for external account transfers. If you’re not sure of the cost of switching to other banks, you should contact your bank customer service via any available online platforms, over the phone, or in-person.
How easy is it to switch banks in Canada?
Switching bank accounts should not take too long. You can finalize the process within minutes or a few days at most. This, however, is dependent on the bank you are with, its mode of operations, and the type of account you have.
Is there a fee for switching banks?
This depends on how you want to move your money from your old bank account to the new one. If you want to move money from one bank to another without going into a branch, you can arrange for a wire transfer. In most cases, this will cost you a few dollars for domestic transfers. If you are concerned about how much it might cost to transfer your money, contact your old bank for guidance on associated fees.
Can you have two or more bank accounts with different banks?
Generally, you can have as many bank accounts as you like from banks that are willing to let you open one. However, opening additional bank accounts with any bank is different from switching banks.