Closing your bank account may seem simple at first glance. However, there are a number of steps to follow and actions to take to close your account properly. Following the correct process will help you avoid unnecessary charges, fees and complications. We’ll walk you through the process from beginning to end and provide tips of what to look out for along the way.
1. Open a New Account
Your first step starts not with the account you want to close but rather with your new account. You’ll need to open your new account first so you have somewhere to transfer your payments and funds later on.
Perhaps you’re closing your bank account because you’re moving to a new area. But if you’re closing the account because you’re unhappy with it or the bank itself, you’re going to want your new account to fit just right. A good place to start is simply by checking out the best checking accounts. That way, you know you’re starting your search with the best the industry can offer. If the account you want to close charged too much in fees, be sure to look for a free checking account to avoid any further fee hassle. Really, there are a ton of options out there to choose from. So you don’t have to be stuck with an account you don’t like.
Once you’ve found your new bank account, check whether the bank offers a “switch kit.” A bank’s “switch kit” includes checklists and forms to instruct depositors and billers about the change in your accounts. These can help make the switching process more convenient.
2. Update Automatic and Recurring Payments
Before you actually close your account for good, you need to tie up any loose ends. To start, take stock of all your automatic and recurring payments. This includes things like your music and television streaming services, your gym membership, student loan payments and more. It helps to look at your bank statements from the past year to get the best look at your spending habits.
Armed with your list of payments, you can begin cancelling them from your old account and setting them up with your new account. Be sure to take note of when each next payment will be, though. For one, this will prevent potentially paying twice for a service from each account. It will also ensure you don’t overdraft one account to make the payment. On one hand, the payment might draw on your underfunded new account. On the other hand, the payment could draw on your old account after you’ve emptied it.
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3. Switch Your Direct Deposits
Just as you want to look at where your money is going, don’t forget about where your money is coming from. Head to your company’s payroll department to update your direct deposit settings to reflect the change in account. You’ll need to provide your new bank account’s routing and account numbers. This may take some time to take effect so be sure to monitor both accounts to make sure the changes go through correctly.
This also applies to any investment or brokerage accounts and any other sources of income you might have. You’ll have to change your account information in those accounts to make sure you receive your payouts.
4. Transfer Funds to Your New Account
Once you’ve updated your payments and deposits, you can transfer funds to your new account. Check whether there are any transfer limits since you may not be able to transfer your whole balance over all at once. In that case, you’ll have to transfer your balance over a bit at a time. Also, if your account has a minimum balance requirement, don’t forget to keep that amount in there, too.
Remember all those payments you listed and updated? Don’t forget to leave enough money in the account to cover any remaining payments. It might also help to leave some extra money in there in the event other unexpected payments crop up. Otherwise, you could face overdraft fees.
5. Close the Account
Now it’s finally time to close your account. This may take weeks or months to complete, depending on how long it takes for payments to settle and migrate to the new account. It’s important to make sure all your automatic payments are taken care of at this point. You don’t want to end up with a “zombie” account which is what happens when a bank has to reopen your account to make a forgotten automatic payment.
There are typically a few ways you can close your account. You can head to the nearest branch to close it with a bank representative. This might be the most straightforward, since you can ask any questions you might have.
If going to a physical location isn’t your thing, you can also close your account online. Each bank’s exact processes will differ. Typically, you’ll need to contact customer service through your secure messaging system to request your account closure. Other banks may require you to call customer service or mail in a form to properly close the account.
6. Get Confirmation in Writing
No matter which way you close your account, you’ll want to obtain written confirmation from your bank that you closed your account. This will help you build up your financial records for future reference. It can also come in handy as proof of closure if your old bank resurrects your old account to make future payments at any time.
7. The Final Touches
To move on from your old account completely, it’s important to destroy your corresponding checks and debit card. This will prevent you from accidentally using them and from facing fraudulent use.
Even though your account is now closed, don’t forget to save your bank statements. You’ll need them for your records and potentially for taxes purposes.
Tips on Finding the Right Bank Account
Are you ready to close your bank account but don’t have your next account lined up just yet? Not to worry, since you have a ton of options available. Perhaps you’re ready to move on from your old college checking account. You can take a look at the interest-earning checking accounts out there to make keeping your money in an account a little more worthwhile. On the other hand, if you see a potential overdraft in your future, find an account with low overdraft fees.
Not exactly sure what you need from your next bank? Maybe a financial advisor could help you get a better idea. The right advisor can look at your finances more comprehensively and determine whether you could be paying less in fees or saving at higher rates. Luckily, finding the right advisor in your area is as easy as using our advisor matching tool. We can connect you to qualified advisors quickly to get you started.