5 Simple Steps to Switch Accounts

People are always whining about the fees they have to pay on their bank accounts. Or they pay outrageous fees because they never bother to add up their fees so they're totally clueless. In this day and age, paying more than $10 a month for a bank account is an act of lunacy. And earning next to nothing on your savings… well, that's just dumb!

Many of us keep our money in a Big Six Banks, earning a pittance in interest and paying liberally for service. And then we make matters worse by not managing our money properly, so we're in overdraft, bouncing cheques, or using banking machines that not our own and paying whopping ABM charges as a result.

One of the main reasons people won't switch accounts is laziness, plain and simple. It takes work. And not a small amount of work either. If you have pre-authorized debits, it can feel like torture trying to get them all switched over. But if all that's standing between you and an account that pays decent interest without exorbitant fees is laziness, you need to give your head a shake.

Start by making a list of the things you actually need on your account. Do you even write cheques anymore? How often do you go to the banking machine? (If you're going more than once a week, you're using the ATM as a wallet. Stop!) How many swipes of your debit card do you do in a month? Do you travel a lot requiring easy and cheap access to your money when you're on the road?

Once you know the services you need, it's time to go shopping to compare prices and features. You can hit the pavement, let your fingers do the walking, or head on over to the Financial Consumer Agency of Canada's website and use the interactive tool to narrow down the alternatives.

Ready to quictcherbitchin' and fire your current ungrateful, money-grubbing bank? Take these five simple steps to switching accounts:

1. Open the new account. Take 2 pieces of ID with you when you go. And make sure you have your social insurance number because it's a required piece of info for tax reporting purposes. If the account you're opening is a U.S. dollar account, one piece of ID has to prove your citizenship so take your birth certificate or passport. Get all the information you'll need to notify others like the account number and your branch number. Order some cheques even if you aren't writing cheques regularly since you'll need to use voided cheques to set up auto payments and transfers between accounts.

2. List your transactions. Whether you pay your hydro bill by electronic banking, have your car insurance auto-deducted or have your RRSP contribution transferred monthly from your chequing account, you'll have to switch 'em all over to your new account. Look over your past five or six statements and make your list. You'll want to watch for:

utility payments
mortgage payments
credit (loan, cards and lines of credit) payments, and
other accounts that may be linked to the account you're closing, as well as
auto deductions for things like home or life insurance.

Also list all the people who give you money like your employer and the government – think GST, child tax credits and tax refunds.

This will be your master list, and as you transfer each item to your new account, you'll check them off this list.

3. Reconcile your account. You have to account for every penny so you don't have any nasty surprises during the transition. Those six post-dated cheques to the music teacher will bounce sky high if you close the account without telling her and replacing her cheques.

4. First switch over all deposits first.  Then switch over the withdrawals once there's money in the account. That way there will be money in the new account when withdrawals start.

5. Leave the old account open for about two months with some money in it to catch any missing deposits or withdrawals. Don't worry about the balance in the old account is just sitting there wasting time. It's protecting you from the aggravation caused by a poor memory. Be patient and when there's been no activity for a month, consider yourself in the clear and close the old account.

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