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Closing a bank account is not a difficult task, but it definitely needs to be done correctly. This is why everyone needs to know how to do it the right way.
The steps are pretty easy to follow. Let me just pave the right path for you below.
How to Close a Bank Account
Whether you need to close your bank account because you’re moving, switching to a new bank, or eager to get ahold of those lower interest rates, it doesn’t matter.
Closing a bank account and ensuring your money is safe and secure is the same process throughout.
Most people think it’s as easy as calling your bank and telling them it’s time to switch the funds over. That’s not the case.
You want to make sure you transition into the new bank of your choosing properly. And the guidelines for closing out and transferring funds are different depending on the bank or credit union you currently have.
Yes, it starts with a phone call, but often paperwork is involved, too.
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#1. Open a New Bank Account
To start, open a new bank account online. You don’t want to close out a bank account and walk around with your savings and cash in hand to the next bank.
You want to be safe and secure about the process. You want to have a new bank ready to receive transfers from whatever accounts you held at your previous bank.
That means choosing a bank or credit union that you like, after some careful research. Maybe the savings and interest rates drew you in. Maybe the limited fees won you over. Just make sure it’s the right fit for you.
#2. Transfer Money Between Accounts
Once you’re ready to transfer your money to the new bank, you’ll be ready to close out your old bank account.
Try to do the two steps (transferring and closing) on the same day. Some banks find it necessary to charge a to-be-determined fee if your account balance is too low or at zero.
Before transferring your money, though, make sure that there are no outstanding transactions or checks to be cleared.
If this process is not carried out strategically, you may end up paying multiple overdraft fees.
#3. Document Recurring Deposits
If you have any direct deposits, note them down and make sure to move them over to your new bank account.
You may need to fill out new direct deposit forms for your employer at this time so that they can reroute where your paycheck goes at the end of the pay period. Additionally, make sure your routing number is nearby.
#4. Document Recurring Withdrawals
You’ll want to check in on your automatic payment setup, too. Before switching banks, I suggest making a list of all the recurring payments that come out of your account in a month.
Such examples may include car payments, insurance payments, student loans, personal loans, mortgage payments, gym memberships, credit card payments, streaming services, and any utility bills.
Making this list will help you keep track of which accounts you’ve removed from your previous account. It will also help you set them all up again with your new account.
#5. Set Up Automatic Transactions at Your New Bank Account
Reestablishing the automatic transactions with a new bank can be a pain, but it’s necessary.
Most of the time, though, this simple task only requires you to change the bank account and routing number under the payment section of each account, automatically withdrawing funds.
If you’re struggling to remember all automatic transactions, print out 6-12 months of statements from your bank, scan them over, and see what else is missing.
#6. Contact Your Old Bank and Close Account
To finally close your old bank account, find out what your bank prefers. Do they want you to call a customer service phone number?
Do they need an in-person visit? Can you do it online? Or are they requiring a request in writing? Adhere to the rules and regulations and proceed with the closing.
Closing a Bank Account You Had as a Child
Parents often open bank accounts for their children when they’re young – I know my parents did so for me.
Savings and checking alike. This obviously teaches kids how to spend and save money at a young age.
Typically, the parent that set up the account stays on the account as a joint owner. This allows the parent to see deposits, withdrawals, payments, and so on. This also allows the parent the ability to monitor and control aspects of the account.
When we get older, though, we don’t want our parents monitoring our every financial move and decision. We want our own bank account with no one looking over our shoulder.
To close this type of account, you’ll need to go to the bank in person with the parent linked to the account.
The two of you will need to fill out and sign the appropriate paperwork to officially close out the account.
After that, you’ll be able to transfer whatever money is leftover in the account to your new bank.
If you can’t make the transfer currently, your previous bank will write and mail you a check for the balance.
But make sure to tell the bank to only put your name on the check, not your parents, too.
How to Close a Joint Bank Account
Joint bank accounts are similar to that of kid bank accounts. You’ll need to bring your ex-spouse or current spouse to the bank, whoever you share the account with. The two of you will have to sign the appropriate paperwork together.
Sometimes, the second person involved in the joint bank account is not willing to cooperate.
Other times, they cannot be found or do not want to be located. If that’s the case, you will need to speak with your attorney and potentially take the issue to court.
If the account stays open and you do not close it, a risk may ensue. The last thing you’ll want is other people, the courts, or your ex-spouse coming after your money, so be sure to properly close this account as soon as you can.
Can You Close a Bank Account Online?
It honestly all depends on the bank or credit union you have. Different institutions may have different policies in place, so you’ll have to make a phone call or do some research to see if it’s possible to close the account online.
Some do accept a quick cancellation through a message or chat robot in the customer service area online.
Is there a Fee for Closing a Bank Account?
Often, banks do not charge any fee to close out a bank account. Some banks may charge a small fee if you close the bank account shortly after opening it, though.
This rule of thumb tries to stop customers from opening too many bank accounts at once to enjoy the opening perks then leave.
However, overdraft fees are definitely relevant. If you close your account too soon without canceling automatic withdrawals, you’ll technically go into overdraft and must owe your previous bank those fees.
Does Closing a Bank Account Hurt Your Credit?
Bank accounts are not a part of your credit report, so no, closing one will not harm your credit. Your credit history will not be altered in any way, shape, or form.
Bottom Line: How to Close a Bank Account
In conclusion, closing a bank account is pretty easy. Just have your ducks in a row and follow the above guide step by step.
Don’t close the account and transfer all your money until you’ve covered everything else, and you’ll be good to go!