How to Close a Bank Account
Posted by Frank Gogol in Banking | Updated on August 23, 2022
Having a bank account can be useful for many reasons: your loved ones might send you money using this account, or you will receive your salary through it. In some cases, you might not need the bank account anymore, and you have to close it.
But how to close a bank account? Check below to learn how to close it the easy way and when you might want to put an end to your bank account.
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Reasons for Closing Your Bank Account
At one point, you might have created your bank account for a specific purpose. Perhaps your new job required it to send your salary each month, or maybe you wanted to send money to someone or have money sent to you. So, it’s a pretty useful thing to have, and it’s good to own one in case you ever need to perform any operation that involves sending money or saving it.
But there are a few reasons that might make you want to close your account. Usually, people who close a bank account do it because:
- They want to switch to an online bank
- Better interest rates are offered in another place
- Moving to another city or state requires them to close their account
- They want to avoid expensive fees
- They aim to qualify for a bank-offered bonus
- Poor customer service made them want to cease operations with the bank
- They want to consolidate their banking
- They plan to open a joint account
- They want to switch from a child account to an adult account
- They want better features and services
Whatever the reason, you should think carefully before closing the account. Before you act on impulse, it’s best to sit for a while and think if this is the right decision for you, or you’re doing it for reasons that are not that serious.
Checklist for Closing Your Bank Account
Closing your bank account is a complex process that requires a lot of carefulness and attention. You have to do more than simply contact your bank and let them know about your decision.
If you want the transition to be successful without any issues, there are some steps you have to go through. Here’s a checklist for closing your bank account to make sure you’re doing it the right way.
1. Open a New Bank Account
First things first, before you close your old account, make sure to open a new one. You might have some money that needs to be saved somewhere before closing your account and potentially losing that sum. So, if you open a new account, you will have a secure place where you can safely transfer over any payments, debits, or direct deposits.
Before opening an account with a new bank, make sure you choose the bank carefully. Each bank has its own rates, fees, and account offerings, and you need to decide based on them and which ones are more convenient for you. You can pick between online banks or brick-and-mortar banks, so choose wisely.
2. Change the Scheduled Deposits and Payments
Do you have any automatic payments or direct deposits set up? If that’s the case, think about all of them before closing your bank account – otherwise, you might lose them or encounter various issues.
You can easily check for such payments and deposits and write them down on a list. This could include things like insurance payments, mortgage payments, car payments, credit card payments, streaming services, utilities, gym membership, personal or student loans, and different household bills.
Make sure to also talk to your employer in case there are any forms you need to fill out for direct deposits so they can change the paycheck to send you the deposits to the new account.
3. Send Your Money
Once everything is ready, you should transfer all of your money to the new bank account. Of course, you should first let potential big transactions clear first, which might take a few months. Otherwise, overdraft fees are going to be charged.
If there’s any money left after clearing the account, transfer it to the new one. Transfer it only when you know you’re ready to close the old account.
4. Contact Your Bank
After performing all these steps, it’s time to contact your bank. You could either close the account online or give a phone call to the customer service of the bank. Before closing, some banks want an account closure request form filled out, or a written request to be submitted. In any case, you should follow the guidance that your bank offers to properly close your account.
5. Wait for a Confirmation
Wait for a written confirmation of the bank account closure. Don’t just expect the account to be closed because an employee said so. You should get a confirmation, as the Consumer Financial Protection Bureau recommends. This is great protection in case the bank didn’t follow through on the request you made.
A Note on Inactive Accounts
If your account has been inactive for a long time, you can still close it, but you have to reactivate it first. Otherwise, it cannot be closed by the bank. So, before anything else, you should contact the customer service of the bank to reactivate the account. In some cases, you might also be able to do this either online or through online banking options.
Other Scenarios for Closing a Bank Account
There are different types of bank accounts or scenarios that require a unique approach. Here is what you should do in various situations:
Closing an Account for a Deceased Person
Do you have a loved one that passed away recently? If that’s the case, you can close their bank account, but it’s a bit of a complicated process.
It all depends on how the deceased person structured their finances, as it will influence how the account is handled. Also, you might have to provide certain documents and meet some requirements depending on what the laws in your state are. Make sure to get some legal counseling before you start this process.
Closing a Childhood Bank Account
If your parents opened a custodial account for you, you might still have it. But when you become an adult, you have different needs and requirements, so the childhood account will not be suitable anymore. You can close it as you would a normal account, whereas some bank accounts like the Kids Savings Account from Capital One 360 Bank automatically convert it into a regular savings account when you turn 18.
Closing a Joint Bank Account
In the case of a joint bank account, both holders should offer their signature to close it. In some situations, though, some banks may only need the signature of one holder to close the account. But when canceling a joint account online, both holders might have to log into the account individually and request the closure.
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Closing a bank account is not that difficult and can be done by following several steps. Make sure you have a good reason for closing an account before you start the closure process.
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