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household finances

Man using a bank machinegrebcha

Last fall, Justin White left his bank – a relationship he'd had since the late 1990s.

He didn't like what he was reading about several Canadian banks and their lending involvement in the proposed Dakota Access pipeline near the Standing Rock Sioux reservation in North Dakota. So he switched to a local credit union in November.

The Burnaby, B.C., resident isn't the first person to consider breaking up with his bank. Some leave because of a new job or a new spouse, while others have just had it with soaring fees, bad service and aggressive sales practices.

"It's really not that hard," Mr. White says. "You're a consumer. You make them money so if you're not happy with them then the worst thing that could happen to them is that you leave."

Like any divorce, it can be quick and relatively painless or time-consuming and complex. It all depends on your approach.

It was a smooth switch for Mr. White and it can be for you too. Here are some things to consider if you want to unwind your bank accounts.

Chequing and savings accounts

First of all, shop around and decide where you are taking your business. Open a personal chequing or savings account at your new financial institution before closing your current account.

Go through several monthly statements from your existing account and make a list of all preauthorized payments and direct deposits, since they end when the account closes.

A list will make it easier for you to provide new account details to your employer, pension plan or Canada Revenue Agency, as well as any billers like credit-card companies and utilities. CIBC offers a handy checklist.

Depending on your bank, you can close a chequing or savings account at a branch by phone or online. There is usually no fee to close a chequing or savings account. But CIBC charges fees to close and/or transfer accounts to other financial institutions. Royal Bank's $20 fee is waived if you close the account in person.

You can choose whether to take the closing balance in cash, bank draft or wire transfer. But there are fees with the latter options. Note that May and June is a great time to shop around for a new chequing or savings account because many financial institutions offer promotions, such as iPad Minis, TVs or cash, for your business.

Credit cards

Credit cards and bank accounts are not tied to each other. So you can have a credit card with one financial institution and a bank account elsewhere. Cancelling a card can be done at a branch or by phone and should be effective immediately.

There is no fee to close a credit-card account. But you still have to pay the outstanding balance, as well as any fees, carry-overs and interest.

Remember that pre-authorized payments set up on the credit card will no longer be processed, so you'll need to provide billers with your new credit-card number.

Personal loans

You will first need to decide which new personal-loan product you want and apply for it through your new lender.

Once you've qualified, you'll need to notify your current lender in person and pay the balance plus interest either by cheque or debit at the time of closing.

There is no closing fee.


For a conventional mortgage, it's a good idea to wait until the mortgage term matures to avoid paying penalties.

But you should look for a new mortgage before your term ends. (Many lenders provide online information and incentives to transfer a mortgage. BMO, for example, offers this promotion.)

Give yourself a month before the renewal date to pre-qualify with a new lender (you can lock in a rate 90 days in advance of the renewal date, and this is a no-brainer). This lead time allows the bank to process your mortgage application, which requires a property appraisal for a fee and proof of income and employment. The lender also needs to do paperwork to get a payout statement from your current lender indicating the mortgage balance.

There's a discharge fee of several hundred dollars to transfer the mortgage title to your new lender but banks will often cover it. There can be other charges too. For example, TD Canada Trust charges a reinvestment fee of $300 for a first-term mortgage that isn't renewed.

If you decide to transfer your mortgage before the term matures, you'll have to pay a penalty. Your mortgage document will have the formula to help you estimate the amount. But your bank will tally the exact amount.

Remember to provide the new mortgage details to your home insurer.


To transfer registered investments, such as RSPs, RIFs and TFSAs, you'll need to meet with your new bank and bring your statements. Once you settle on the appropriate investment vehicle, the adviser will fill out a transfer authorization form, which will be sent to your bank to request the transfer.

There is a transfer-out fee per transfer. Since you're a new customer, it's worth asking your new bank to cover this fee, which can run anywhere from $50 at Royal Bank to $135 at BMO.

The transfer process takes several weeks to complete.

If you hold non-registered investments, such as GICs or term deposits, it's advisable to wait until the maturity date to transfer them to avoid penalties.