Dennis Hammer is a writer and finance nerd with six years of investing experience. He writes about personal finance for Wealthsimple. Dennis also manages his own investment portfolio and has funded several businesses in the past. Dennis holds a Bachelor's degree from the University of Connecticut.
Sick of your current bank's excessive fees, poor customer service, and slim product options? If your current bank isn’t meeting your needs, it might be time for a change.
How to Switch or Change Banks
Changing banks may seem like a pain, but with a little planning, it’s easily managed. These steps will teach you how to switch banks.
Step 1: Identify Why You Don’t Like Your Current Bank
Before you choose a new bank, you need to know what you don’t like about your current bank. Is it the high fees? Limited hours? Poor customer service? Make a list, so you know what to look for in your next bank.
Step 2: Choose Your New Financial institution
Select a financial institution that has all the features that meet your criteria. Explore local and online banks. You may not want to give up the convenience of a local branch, but online banks typically have lower fees, higher interest rates, and a no-fee travel network.
Make sure you understand your new bank’s rules before making your decision. Review their fee structure, minimum balance requirements, processing times, financial products, etc.
Step 3: Make a List of Your Automatic Payments and Deposits
Like a lot of people, you probably have money coming in and going out of your account automatically, such as a directly deposited pay cheque. You may also have a few subscriptions that are deducted from your account each month.
Go through your current account and make a list of all of these automatic transactions. Look at a year's worth of statements to find any annual direct debits. Keep this list handy because you’ll need to notify all of those accounts once you change banks.
Step 4: Open Your New Account
Once you’ve chosen a new bank, it’s time to open your new account. Fortunately, banks make this process exceedingly simple. If you’re using a local bank, visit the branch and speak to a representative. They’ll walk you through the process. If you’re using an online bank, follow the steps on their website to open the account and verify your identity.
Your new bank may have a simple process for transferring funds from your old account to the new one. It may be simplest to withdraw the cash from your old bank and deposit it when you open your new account.
Step 5: Set Up Your Direct Debits and Deposits
Now that you’ve opened your new account and transferred your money, the next step is to contact all of the people and companies who automatically deposit or withdraw money from your account. You will need to supply them with your new account number and sort code.
In some cases, this will be fast and simple. You can log into Netflix, for example, and change your payment information in just a few minutes. Other cases may take more time. You’ll probably have to speak with your company’s HR representative to change the account details in their payroll file.
Don't forget to change the banking information in any online payment systems you use, such as PayPal, Apple Pay or Google Wallet. They may not make automatic debits, but the payment process will likely be interrupted if you try to process a transaction using your old banking information.
Step 6: Start Using Your New Account
Once your new account is open, funded, and receiving your income, start using it to pay your expenses. Do not make any withdrawals or transactions from your old account.
Don’t close your old account just yet. Leave some cash in it in case you forgot about a payment or direct debit. Monitor your old account for at least two statement periods. If you moved all your debits and credits to the new account, your old account shouldn’t have any activity. If any transactions appear, resolve them right away.
Step 7: Close Your Old Account
Once you’re satisfied that your old account doesn’t serve any purpose, call your old bank and have them close the account. You may need to send a letter or appear at a branch with your ID or other documents. Ask if there is a fee to close your account. (Yes, account closing fees actually exist.)
Your old bank might offer to waive certain fees for a year or give you free fraud protection. Note that these offers usually expire in a short time.
Before you leave, have your old bank give you something in writing that states that the account is closed. Keep this with your records. This will protect you in case they fail to properly close the account.
Step 8: Check Up on Your Old Bank
Some banks will reactivate closed accounts if direct debits or deposits occur. They usually notify you of this, but you’ll want to check anyway. Set a reminder for yourself to call your old bank 30 days after closing your account. Ask them to verify that the account is still closed.
Why People Switch Banks
Why would you want to switch banks? There are several reasons.
You want better customer service.
You want access to better technology tools.
You want lower fees.
You want access to more financial products.
You moved outside the bank’s region.
You marital status changed (they want to combine finances).
You want more ATMs and branch locations.
Your finances are an important part of your life. If you aren't happy with how your bank manages your money or serves your account, don't be afraid to find a provider that better meets your needs.
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