Not all bank accounts are set up with your best interests in mind. Your current bank account may have high monthly fees, no opportunity to earn interest, or a clunky interface that makes it difficult for you to manage your money. All of these are perfectly valid reasons why you might want to know how to close your bank account.
If you decide to part ways with your current bank, closing your account is an important part of the process. With that in mind, today we’re going to explore how to close a bank account.
How to close a bank account
Closing a bank account should be a simple process. After all, opening a bank account is easy. Why shouldn’t it be easy to turn it off?
From personal experience, closing a bank account is not a simple one-click process. Instead, several steps are required to properly close an account.
If you’re closing your account, here’s a step-by-step guide to completing the process.
1. Transfer your funds to another bank account
The first step in the process is to transfer your funds to another bank account. For some, this means moving your money into an existing account to strengthen your financial life.
But for others, it means opening a whole new bank account. It depends on your answer to the question “How many bank accounts should I have?”
If choosing a brand new bank account, take some time to find the right one for your situation. You don’t want to be stuck switching bank accounts again anytime soon. Some things to be aware of include account fees, minimum balance requirements, and accessibility.
After you set up your new bank account, you can transfer funds from your existing account to this new account.
2. Transfer all recurring payments to the new bank account
Once all of your funds have been transferred, you should let everyone who sent you money know of the change. If you have any automatic payments from your bank account, please make sure the payer knows your new bank account information.
For example, you may need to change your recurring payment information in your investment account, or if you receive money from any unique side businesses.
3. Update your direct deposit information
While figuring out how to close your bank account, you still need to make sure you can get paid as usual.
If you get paid for your work through direct deposit, it’s crucial to let your employer know about your new bank account. Often, this part of the process is as simple as filling out a new form with the company’s human resources department.
Other sources of direct deposit funds, such as government benefits, also need to know about this new bank account. If you’re not sure who should have gotten this information, double check your bank statement to find out who automatically deposited money into your account.
4. Update direct debit information for any automatic billing
You may decide to automate your finances. If you pay any bills using automatic payments, you’ll need to update your payment information with your new bank account.
Start by making a list of all automatic payments. Then go through the list methodically to avoid missing a billing provider.
Some common recurring payments to consider include mortgage payments, rent payments, student loan payments, credit card payments, streaming services, utility bills, insurance payments, and car payments.
5. Wait a full month
It’s easy to miss an automatic payment. Do not close the account immediately, but wait a full month to confirm that nothing is missed.
During the month, please monitor your original bank account for any transactions. If you forget a particular recurring payment, you will have the opportunity to update it. Also, make sure your paycheck is deposited into the correct account.
Once all pending payments have cleared your account, you can safely close it.
6. Submitting documents for account closure
Most banks require you to complete a paper form to close your account. Not only will you be required to submit a paper form, but you may be required to sign the document.
In some cases, your bank will ask you to sign the document in front of a notary public.
While some banks may allow you to close your account entirely online, others require you to visit a local branch.
7. Get confirmation
When you submit paperwork to close your bank account, ask your bank representative for written documentation confirming the account closure.
If this bank account comes up on your radar in the future, you will have proof that it was closed with your permission.
When it comes to closing bank accounts, Be prepared for delaying tactics. I went through the painful process of closing an account at a major bank. It’s not a smooth process. Despite the bank’s best efforts to delay, my account was eventually closed.
As you navigate the process, feel confident in your decision. Don’t let the bank try to convince you to stay. After all, you’re making this switch for a reason.
Can you close a bank account online?
Some Banks and Financial Institutions Will allow you to close your bank account online. This could be as simple as submitting a form through the bank’s online platform.
But other banks, especially larger institutions with brick-and-mortar operations, may need to physically close your account.
Is there a fee to close a bank account?
If you close your account within 90 days, you may encounter Early Closing Account Fees. But generally, you will not pay a fee to close your bank account.
If you need to pay to close your bank account, that’s further evidence that it’s time to part ways with your bank. Going with a bank that tips you at every turn is usually not a good move for your financial situation.
What should I do before closing my account?
If you decide to close your bank account, evaluate why you want to switch. Simplifying your finances is a very legitimate reason. But if you only have one bank account, ask yourself why you don’t like the one you currently have.
Maybe you don’t like the high fee structure.Maybe You want to get higher APYS. Whatever your reason, look for a bank that can provide a solution for your new bank account.
Are there downsides to closing a bank account?
Closing an account can be an unpleasant process. But the end result is usually very positive.
You’ll be walking away from an account that could be full of fees. You are expected to get into a new bank account that brings you even more money.
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While it’s not a one-click process, it’s still worth pursuing if you’re looking to change your banking situation. As you move forward, take a closer look at your other banking options.
When you find a bank account that suits your needs, start the current account closure process. Doing so will help you experience better financial health and keep your finances in order.