Whether you’re moving out of the area or switching savings accounts to get a better rate, closing a bank account properly is essential to protect your financial security and avoid unnecessary fees. Keep reading to learn how to close a bank account the right way.
Step-by-step guide to closing a bank account
- Prepare your new account: Decide where you’ll move the funds from the account you plan to close. Make sure the new account is open and ready for an incoming transfer.
- Compile your account records: Make sure you have paper or digital copies of your bank statements for the past year. Keep them in a secure location, such as a password-protected digital folder or a locked filing cabinet.
- Notify your employer: Are you receiving direct deposits in the account you want to close? Avoid missing payday by providing your employer’s payroll department with the new account details.
- Update your billing information: If you have any monthly bills or subscriptions being charged to the account you’re closing, make sure you update that information directly with each provider. Double-check your statements to make sure you don’t miss anything.
- Transfer your funds: Ask your bank about the best way to move your remaining balance into the new account. It’s usually easiest to complete this process via wire transfer, although you can also write yourself a check for the full balance and deposit it into your new account. If you have a negative balance, you’ll need to deposit money before you can close the account.
- Contact the bank to close your account: Notify the bank that you want to close your account. This process varies depending on the institution, but you can generally find out exactly how to close your bank account by contacting the bank’s customer service team or visiting a branch.
Reasons for closing a bank account
Low rates
If you’ve been with the same bank for longer than you can remember, it might be time to compare rates and make sure you’re getting the best possible return on your funds. Finding a more competitive interest rate at a different bank may be enough justification to close your account and transfer the balance.
Poor service
Not happy with the service you’re getting from your bank? With today’s plethora of banking options, there’s no reason to put up with subpar service. Pay particular attention to customer reviews as you shop around for a new financial institution.
Accessibility
Depending on where you’re located geographically, some banks may be more convenient to access than others. If you’ve moved recently or are unhappy with the number of branches and ATMs in your area, you might want to think about switching to a bank with a better presence.
Of course, online accessibility is something to think about, too. If your existing bank is lagging behind competitors when it comes to mobile banking and other digital tools, it could be time to upgrade to a more tech-forward institution.
Inactivity
It’s generally not a great idea to let bank accounts sit inactive. For one, banks can charge recurring fees when accounts don’t meet certain ongoing requirements, such as a minimum number of monthly transactions. Accounts that lie dormant for too long might even be closed by the bank automatically, and those that remain untouched for three to five years can be considered abandoned and turned over to your state’s treasury.
Try to keep all your bank accounts — particularly checking accounts — active by consistently meeting your bank’s minimum transaction requirements. If you find that any of your accounts have fallen inactive, don’t hesitate to close them and deposit the funds into an account you use more regularly.
Poor banking history
While uncommon, it’s possible to find yourself in a situation where your bank closes your account due to unsatisfactory activity. This might include repeated overdrafts, bounced checks, or even suspected fraud. If your bank closes your account on your behalf, it’s important to get in touch as soon as possible to find out why and learn about your options.
Considerations when closing different bank account types
Checking accounts
Since your checking account likely hosts most of your incoming and outgoing financial activity each month, switching accounts can be a tedious process. First and foremost, make sure any direct deposits are routed to your new account before closing the old one.
The more tedious part of the process is updating the billing information for each one of your recurring payments. These might include utilities, loan payments, streaming services and other subscriptions. Failing to notify just one of these providers can result in late fees or cancellation of services.
CD accounts
Except in the case of rare extenuating circ*mstances, you should only plan to close a CD account when it reaches its maturity date. Closing a CD before the end of its term will result in early withdrawal penalties.
When the account matures, most banks will automatically roll your funds over into a new CD if you fail to take action. You’ll need to close your CD within the grace period to avoid an automatic rollover, which usually occurs within seven to 10 days. Stay on top of your CD accounts by putting a reminder in your calendar each time one is set to mature.
Credit card accounts
Deciding whether to close a credit card account can be tricky. On one hand, having a line of credit at your fingertips can be too much of a temptation for some, leading to overspending and accumulating debt. On the other hand, closing a credit card account can hurt your credit score.
“Closing an account may temporarily ding your credit score depending on the length of time the account was open and the amount of credit that was available to you,” said Andrew Van Alstyne, a financial advisor at Fiduciary Financial Advisors. “I’m usually okay with my clients keeping their oldest account open to help maintain their credit score, so long as they don’t fall susceptible to putting all their expenses on it.”
How to close a Bank of America account
Bank of America requires its customers to complete a few steps before closing an account, such as bringing the balance to $0 and leaving an updated mailing address. Accounts can be closed in person, over the phone or by mail.
How to close a Chase bank account
You’ll need to call Chase, send a secure message or visit a branch in person to close your bank account. Be sure to bring your account to $0 and download statements before you initiate the closure of your Chase account.
How to close a PNC bank account
PNC gives customers the option to get service in person, over the phone or via live chat. Get in touch with a representative to close your account. As with any other bank, make sure you’ve prepared your account by stopping automatic deposits and payments, getting to a $0 balance and downloading your statements.
Frequently asked questions (FAQs)
Closing a checking or savings account will have no direct impact on your credit. Closing a credit card account, however, can negatively impact your credit score by lowering your average credit history and increasing your credit utilization ratio.
Most of the time, you won’t be charged a fee simply for closing a bank account, although there are a few exceptions. For example, closing an account too soon after opening it and failing to settle outstanding payments can result in fees.
When you close a bank account, your bank will likely require you to withdraw all funds before the account is considered fully closed. If your account was closed by the bank, you’ll need to get in touch to ask how to access your funds.
If you find out your bank has closed your account without warning, the first step is to speak with a representative to find out what triggered this action. Closures due to a negative banking history can make it difficult to open a new account at another bank. In this case, you’ll need to look into second-chance banking options.
Depending on the circ*mstances in which your account was closed, you may have the option to reopen it.
