How to Switch to a New Bank or Credit Union in Canada

As a Canadian, your bank probably has an involvement in your daily life, whether you realize it or not. Your paycheck likely gets put into your bank account via direct deposit, you might make auto contributions to your RRSP or investment account, and you may have your rent or mortgage payments deducted from your account. Not to mention the integration of banking with your credit card, something you use for booking travel, purchasing groceries, and funding your daily trip to Tims.

Given the involvement of a financial institution in your life, what happens when you want to switch to a new one?

For many people, the idea feels overwhelming. There may be plenty of reasons for wanting the switch, but the process itself can feel risky. Switching to a new credit union or bank is much more manageable when you approach it incrementally. In this article, we’ll provide a simple, step-by-step guide to help get you started. 

Step 1: Determine Why You Want to Switch Banks

Before you start to compare the biggest banks in Canada and different savings vs chequing accounts, you must begin by clarifying your motive. Why do you want to switch accounts in the first place?

Be clear and realistic. Banking isn’t free and you need to evaluate the true costs involved, rather than the potential value alone.

Common reasons for switching banks include wanting:

• Lower monthly fees
• Higher savings rates
• Better branch access or a stronger digital banking platform
• Personalized service from banking staff
• More comprehensive digital tools
• Stronger small-business support

Switching financial institutions without a clear goal can lead to moving again later on. Which is less than ideal. Not only is changing banks a time-consuming process, but it can complicate your financial situation when done frequently, putting you at risk for missing payments.

The reason you want to switch banks also matters because it impacts which bank is best for you. It can help you decide between banks vs credit unions as well. While a traditional bank offers scale, national branch networks, and a wide range of products, credit unions tend to focus on community-based banking and lower fees. Neither option is universally better. The right choice depends on what you value most and how you use your accounts.

Step 2: Compare Accounts and Fees Carefully

Once you know why you want to change your bank, focus on the specific accounts. Start by examining the fees. How much will the account cost on a monthly basis? Does the account waive these charges with a minimum balance? If so, do you have that amount of money sitting idle?

Also, review transaction limits and ATM access. This is especially important if you make frequent withdrawals or e-Transfers. Or, if you live in an area with limited bank branches.

While you’re looking at new accounts, take a couple of extra minutes to compare promotional and sign-up bonuses. Sometimes, you can get a waiver on account fees or receive cashback and other benefits. If you’re already considering changing your bank, then it makes sense to take advantage of one of these offers. But be cautious. Weigh the post-promotional cost of the account as that is more important in the long run than the initial bonus. Always check conditions such as required direct deposits or activity levels as well.

Step 3: Open Your New Account

Before you close your current bank account, you need to first open the new one. But, consider keeping your old account active during the transition as it helps prevent missed deposits, bounced payments, or unexpected NSF fees.

To open a bank account in Canada, you’ll typically need government-issued ID, proof of address and, sometimes, your social insurance number (SIN). You can open most accounts online, though in-branch options are still available with some financial institutions.

For more details on how to open a savings account in Canada, check out FinlyWealth’s guide.

Step 4: Move Your Money

Once your new account is open, start transferring your money. But not all at once. Begin with a small amount to test that transfers, deposits, and withdrawals work as expected. To ensure you can cover upcoming bills, keep a cash buffer in your old account during this period of time. It can help you avoid NSF fees.

For chequing and savings accounts, there are several ways to move funds between institutions. FinlyWealth’s guide on How to Transfer Money From One Canadian Bank to Another breaks down your options in detail, including Interac e-Transfers, linked accounts, and bank-to-bank transfers.

For registered accounts (like TFSAs and RRSPs), use an institution-to-institution transfer to avoid a withdrawal (which can be taxable for RRSPs) and to avoid TFSA contribution-room issues.

Step 5: Switch Your Direct Deposits

After your new account is up and running, update any direct deposits linked to your old bank account. This means changing where you receive your paycheque and government benefits such as CPP, OAS, GST/HST credits, and the Canada Child Benefit.

Processing times vary by employer or agency, so changes may take one or two cycles to fully take effect. With this in mind, it’s a good idea to keep both accounts open until you can confirm deposits arrived as expected.

For a more detailed walkthrough, including timelines and step-by-step instructions, see Finly Wealth’s Direct Deposits Guide for Canadians.

Step 6: Update Pre-Authorized Payments and Subscriptions

Just like you need to change the location of your direct deposits, make sure to revise your pre-authorized expenses and subscription payments as well. To get a better idea of what you need to update, review three to six months of account statements.

Here are a few items you might need to change payment details for:

• Utility bills, such as electric, water and internet charges
• Insurance premiums
• Streaming services
• Account subscriptions
• Gym memberships

This step is easy to underestimate. But it’s one of the most important parts of switching banks. Missed or declined payments can trigger late fees, service interruptions, or even damage your credit score if a bill goes unpaid. It’s always best to take the time to audit (and update) everything now. It can save you from much bigger issues down the line.

Step 7: Monitor Both Accounts for Several Months

Even after you have moved your money and changed your deposits and payments, keep both your old and new accounts open for several months. The key? Review them regularly. This extra monitoring period helps prevent overdrafts, declined payments, and surprise fees.

Watch for:

• Late-arriving deposits such as those from payroll, rental income, government benefits or tax refunds
• Any less frequent charges including annual insurance payments or quarterly tax instalments
• Forgotten subscriptions still linked to your old account

Consider saving a copy of your account statements along with confirmation emails and other correspondence related to the banking switch. Those records can help if you need to trace a payment or resolve a billing issue.

Step 8: Close Your Old Account Properly

Once you’re confident all deposits and payments have fully transitioned, you can close your old bank account. Before you do, though, confirm the account balance is zero and that there are no pending transactions.

Each bank and credit union will have a different process for account closures. Some require an in-branch visit, while others allow you to close an account by phone or online. Check with your current financial institution for their specific procedure.

Finally, request written confirmation that the account has been closed. This helps minimize unexpected fees or account issues after the switch is complete.

Common Mistakes to Avoid When Switching Banks

• Closing your old account too early. Shutting down an account before deposits and payments fully transition can lead to missing transactions, NSF fees, or declined charges.
• Chasing a sign-up bonus without reading the conditions. Many bonuses require minimum balances, direct deposits, or ongoing activity that may not fit your current banking habits.
• Forgetting linked accounts. Check your lines of credit, joint accounts, and overdraft protection when switching banks. These may remain linked to your old account and require separate changes.
• Assuming automatic payments update themselves. You must modify most pre-authorized payments manually. Missing one can trigger late fees or even impact your credit score.

When Switching Banks Might Not Make Sense

While you may want to change over to a new bank to take advantage of a promotional interest rate or sign-up bonuses, it doesn’t always make sense to do so. As you evaluate your banking needs, be honest about your habits.

Ask yourself the following:

• Do I rely heavily on in-branch services? If so, look into where the new bank or credit union has locations. If there are no branches close to your house or workplace then you may find it less convenient to make the switch.
• Can I maintain the minimum balance requirement? When promotions or lower account fees rely on keeping a sizable balance in your account, you may find you are inconveniencing yourself. You can also miss out on interest earnings by keeping your funds in a chequing account that doesn’t pay you to do so.
• Are the product bundles actually saving me money at my current branch? You may find that you have a bundle that does not exist at the new financial institution. As you evaluate switching, consider whether you would actually receive a better deal elsewhere. If you won’t, it may be better to stay put.

These are just a few questions to ask yourself as you make your decision. In the end, remember that the best option depends on your situation.