Plan ahead if you are thinking of closing an account or opening a new account. For example, if you make direct deposits into your account, you must have these cancelled for your old account and set up for your new account. The same is true if you pay bills by Pre-Authorized Debit (PAD).
Six steps for closing a savings or chequing account.
- Open your new account before you close the old one: This is to ensure that you don’t miss any deposits or payments. Tip: If you are moving to another city, check to see if your financial institution will offer any special deals to keep your business.
- Notify your workplace: If you have direct deposits from work, tell the person at work who takes care of payroll about your account change.
- Move your PADs to your new account: Make sure everyone you pay through a PAD has your new account information. Sometimes your bank may do this for you. Tip: If you don’t send the new account information to those you pay, you may be charged fees for not having enough money in your old account. If this happens, you can pay a fee of $20 or more each time there is not enough money in your account.
- If you use a chequing account, stop writing cheques on the old account: Make a list of any cheques that still haven’t been cashed. Tip: Sometimes people write cheques to be cashed a month or more in the future. If you have done this, replace the cheques from your old account with cheques from your new account. Just make sure that the old cheques are torn up.
- Read your statements carefully: Make sure that everything has been switched over and is running smoothly in your new account. Also make sure that the cheques you wrote on your old account have all been paid.
- Contact the place where you have your old account and tell them you are planning to close it: If you have any money left in the account, you can either withdraw it or arrange to have it moved to your new account.
Remember: Don’t close your old account before your new one is in place.
You may pay some extra fees, but it’s better to avoid problems, like missed payments.
Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.