How To Close a Bank Account Without Incurring Fees | pennyhoarder
You have had a long and trying relationship. But the time has finally come to break up for good.
If this accurately describes you and your bank, it is important that you break up the right way.
Follow this guide on closing a bank account so you can make a fresh start by opening a new account without worry.
Find your new bank or credit union
Before you even consider breaking the news to your bank, you need to find a replacement. It’s a once that rebounding immediately after a breakup is a good thing. Not finding a new bank before leaving the old one could be a huge financial headache for you.
Finding the perfect bank can seem like a daunting task, but it doesn’t have to be. There are many resources to help you choose a bank, whether you are considering an online-only bank, a traditional bank, or a credit union. Once your new account is open and ready, it’s time to start the slow break-up process.
Check out our current list of banking promotions for a chance to earn a cash bonus when creating a new bank account.
Start the break-up process
Make sure automatic payments are covered
Unless you like living with a checkbook, there’s a good chance some (if not all) of your bills will get paid automatically every month. These recurring payments are linked to your checking account. Therefore, if you close your account before transferring your payment information to your new account, your payments will be made by default.
At least that will mean late fees. But if you don’t pay something like your phone or internet bill, your provider can cut service, which could be devastating if you rely on them for work. There is usually a grace period for good clients, but you might not catch it for a while, especially if you are in the process of moving. and change bank.
Update your direct deposits
If your paychecks are deposited into your bank account by direct deposit, you should make sure to update this information with your employer or anyone else who uses direct deposit to send you money on a regular basis. You will need to provide your new account number, as well as your new bank’s routing number.
Whoever pays you will want a void check or something on bank letterhead that shows them routing and account numbers. They probably won’t accept the number you send by personal email. Don’t know where the account and routing numbers are on your check? It’s time to learn with this guide.
To make sure your direct deposits have changed, keep your old account open for at least a month in case your employer makes a mistake and your money goes into your old account instead of the new one. Once you are sure your new information is correct, you should be able to close your old account.
Transfer your balance
After you’ve transferred your automatic payments and direct deposits, it’s time to transfer your balance to your new account. It’s a good idea to leave some money in your old account for a short time to cover payments that you might have forgotten. The last thing you want is to have an overdraft on your old bank account.
Make sure to transfer money from all of your accounts, including checks and savings.
Don’t just jump into a new bank account
Once you’ve transferred your money to your new account, you might be tempted to cut ties with your old bank right away. But it’s a good idea to leave your old one open for a few months just to make sure you don’t have any pending payments.
You can also leave a small amount of money ($ 100 to $ 200) in the account to cover unexpected payments to avoid overdraft fees.
How to close a bank account
Once you are sure that everything is in place with your new checking account, it is time to begin the process of closing your old account.
Online or in person
Depending on the type of account you have (and your personal preferences), you can usually close your account online or in person at a local branch.
Your bank may also require that you submit a written request to close this account. The notification letter must include your name, address and account number. If you have multiple accounts at the same bank, be sure to include the numbers for each account you want to close separately.
Request a written letter
In your written request to cancel your bank account, ask the bank to provide you with written confirmation once the account (s) have been closed. Even if you receive a confirmation letter, it is still wise to call the bank to verify that everything has gone well and that you haven’t missed any instructions from them to finalize the close.
Deposit of the remaining balance
After you close your account, your old bank may send you a paper check for any remaining balance in that account.
Make sure to deposit that check as soon as possible into your new account. Most financial institutions have a deposit feature in their apps, but you can also take the check to a branch for deposit if you feel more comfortable doing this.
Review your return
After officially closing your account, carefully check your last statement. You want to make sure there aren’t any unexpected charges that you don’t recognize. If you see anything suspicious, immediately contact your old bank to resolve the issue.
Frequently Asked Questions (FAQ)
Throughout the process, you will likely have questions about how to close a bank account or hear some terms you don’t understand, such as:
What are zombie accounts?
Some banks automatically reopen closed accounts if a charge is made. This can happen if you forgot to change the details of one of your auto-pay invoices or if your request to change your auto-invoice details was not processed correctly. If this happens, contact your old bank to discuss your options.
Will closing a bank account hurt my credit score?
You probably know that closing a credit card or a loan can have a small effect on your credit score. Fortunately, closing a checking or savings account has absolutely no effect on your credit, as long as you don’t have a negative balance.
What if i have a negative balance?
If your old checking account has a negative balance, you will likely need to pay it off before the bank will allow you to close it. If you manage to close it without paying your balance, the bank may send it to collections, which will show up on your credit report and hurt your credit score.
Can I close my bank account online?
Some banks will allow you to close your account online, but many require you to either call their customer support center or go to a branch to close your account. You will need to check with your specific financial institution to see what they need for account closings.
Is it bad to close a bank account?
No, closing a bank account isn’t bad, as long as you do it right. It has no effect on your credit and it shouldn’t cost you anything to leave your bank. This applies whether you close a checking account or a savings account.
How much does it cost to close a bank account?
If you do it correctly by following all of the steps in this article, closing your account should cost you nothing. But just to be sure, be sure to ask your old bank if they charge an early account closing fee or any other type of fee for closing an account.
The only other way to lose money when closing a checking or savings account is if you forget to switch to automatic payment and your closed account becomes overdrawn. That’s why it’s important to leave your old account open for at least a month to make sure all payments have been transferred to your new account.
How to close a joint account?
If you have a joint account with a partner, spouse, or family member, you can still close the account by following the same steps. Whether or not you will need the permission of the other account owner depends on your state, but in general, an owner can close the account without needing the consent of the other owner.
However, unless you’re a jerk, it’s a good idea to warn the other owner so they can move any direct deposits or automatic payments to another account and avoid missing a paycheck or to be billed for an unpaid invoice.
What should I do with my old debit card?
After closing your old account, you need to get rid of your debit card. It is not enough to cut it in half and throw it in the trash; you need to cut it into several pieces, both vertically and horizontally, and be sure to demagnetize the tape by running a magnet over it.
You should also cut off the three-digit security code on the signature line on the back of your card to make sure it cannot be read. To destroy the chip, you can slice it or break it with a hammer (a good idea if you still feel frustrated with your old bank and want to take your anger out on your debit card); Just make sure you don’t accidentally hammer your fingers during the process!
Breaking up with your bank can seem daunting, but if you go about it right, you can make a clean break and enjoy your new banking relationship without the baggage.
Based in Ohio, Catherine Hiles is a British writer and editor who lives and works in the United States. She graduated in Communication from the University of Chester in the UK and writes on finance, cars, pet ownership and parenting.
This was originally posted on The Penny Hoarder, a personal finance website that empowers millions of readers nationwide to make smart decisions with their money through practical and inspiring advice, as well as to resources on how to earn, save and manage money.