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How to Switch to Another Bank or Credit Union

There are a few common reasons people tend to give about why they choose to change their financial institution. Often, it’s about customer service, a dissatisfaction that drives people away. In other cases, the decision stems from high fees, or the promise of better interest rates elsewhere.

Convenience can also be a factor, with proximity to physical locations still important for some customers. Others make their choice because of benefits or special offers, including perks and rewards.

Switching to a new bank or credit union doesn’t have to be a big deal. Before you do, however, it’s always worth pausing to make sure your reasons are worth the effort and financially sound.

Be honest about your reasons for switching

Have you been soured by a bad customer service experience at your current bank? Are you tempted by a free gift or the higher interest rates you’ll get if you move your money? Perhaps you’re trying to deal with debt by saving on fees.

Whatever the reason, start with an honest assessment of your situation and your needs. Next, shop around for a new financial institution that can best address those needs, whether it’s lower fees or superior service. Don’t move until you find what you’re looking for.

Choose carefully, and be conscious of fees

Be sure to read the fine print on any offer you get from a new financial institution – some introductory interest rates may change after the first few months, and there may be added fees for transactions and transfers made through basic, low-fee accounts. It’s an important decision, so choose carefully – you don’t want to end up costing yourself by moving your money around.

Financial institutions don’t typically charge any fees for moving chequing and savings accounts to a new provider, but customers are likely to face penalties for moving a mortgage between lenders or closing certain types of investment accounts such as RRSPs. It’s important to understand the full impact of any fees and penalties before making a final decision to switch.

You might not need to switch

In some cases, it’s worth going back to your existing financial institution after researching what’s available elsewhere and asking whether they’re willing to match an offer or rate or give you something else in return for staying. If they are, you’ll get the benefit of a deal without having to go through the switch. Your chances of a successful negotiation may be better if you’re a long-time customer or if you have multiple accounts, including a mortgage and investments.

Make a list of all the automatic transactions in your current accounts

Most of us have a variety of important monthly transactions occurring in our accounts. These could be utility bill and credit card payments, premiums for home and auto insurance policies, or transfers to investment accounts including RRSPs, TFSAs, and RESPs.

Before switching financial institutions, it’s important to make a reliable record of all your automatic payments and deposits. You don’t want a missed payment to your cell phone provider or energy utility coming back to cost you, so go back through your transactions for a few months to be certain you’re not overlooking anything.

Set up your new account, but leave the old one active a little longer

After you open accounts with your new financial institution, it’s time to refer to your list so you can set up the schedule of automatic payments. You’ll also need to connect with various sources to make sure any direct deposits, such as work-related income, are going to their updated destination.

While this is happening, leave a small amount of money in your main account at your previous institution just in case any wayward bill payments get processed there. If you haven’t seen any lingering transactions after a couple of months, you can transfer out the last of the funds and contact your past financial institution to officially close the account.

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