Updated: April 2025  |  bremo.io financial guides

How to Switch Banks in Canada — Step by Step 2025

Switching banks in Canada is easier than most people expect. The main reason Canadians delay switching is the perceived hassle of moving direct deposits and pre-authorized payments. This guide makes the process clear and manageable.

Why Switch Banks?

• Eliminate monthly chequing fees ($100–$360/year)
• Earn higher savings rates
• Access better banking apps and features
• Get cashback on everyday spending
• Reduce banking costs for your household

Step-by-Step Bank Switching Guide

Step 1: Choose Your New Bank

Open your new account before closing the old one. Top free options:

• KOHO: Free banking with cashback (use code 45ET55JSYA)
• Simplii Financial: Free unlimited chequing
• Tangerine: Free chequing + competitive savings + cash-back card
• EQ Bank: Best savings rates

Opening a new account takes 5–15 minutes online. You'll need your SIN, a government ID, and a way to fund the account.

Step 2: Run Both Accounts Simultaneously

Keep your old account active for 1–2 months while you transition. This ensures no payments fail during the switch.

Step 3: Update Your Direct Deposit

Contact your employer's HR or payroll department with your new account's transit number, institution number, and account number. Most employers need 1–2 pay cycles to process the change. Until direct deposit is updated, manually transfer funds to your new account.

Step 4: List All Pre-Authorized Payments

Review 3 months of transactions on your old account and make a list of all pre-authorized debits (PADs). Common examples:

• Rent or mortgage payments
• Utilities (hydro, gas, water)
• Internet, phone, cable/streaming
• Insurance premiums
• Gym or subscription services
• CRA tax installments
• Credit card auto-payments

Step 5: Update Pre-Authorized Payments

Contact each biller and update your banking information. Most companies allow this online, by phone, or via their app. Keep a checklist and mark each off as updated. Allow 1–2 billing cycles for changes to take effect.

Step 6: Update Your CRA Direct Deposit

If you receive tax refunds, GST/HST credits, or Canada Child Benefit, update your direct deposit info with CRA via My Account online at canada.ca. This takes 5 minutes.

Step 7: Wait for One Full Billing Cycle

After updating all payees, wait for one full billing cycle to confirm all transactions now clear on the new account. Check your old account for any missed payees.

Step 8: Close the Old Account

Once everything is confirmed moved, contact your old bank to close the account. You can typically do this by calling, visiting a branch, or sending a secure message. Ensure your balance is $0 first (or have the remaining balance transferred or issued as a bank draft).

Will You Lose Your Credit Score by Switching?

No. Closing a chequing account has no impact on your credit score. Only credit products (credit cards, loans, lines of credit) are reported to credit bureaus. Your chequing account switch is credit-score neutral.

Verdict

Switching banks takes about 1–2 hours of total work spread over 4–6 weeks. The reward is saving $150–$400/year in bank fees indefinitely. For most Canadians, it's one of the best financial decisions they can make.