How to Close a Bank Account

07.03.2023
1409
14 min.

Closing a bank account can be straightforward. However, it is important to consider the implications of closing an account and follow the proper steps to ensure that the process is handled correctly.

How to Close a Bank Account

This article provides you with details on why and how to close your bank account. You can follow the guide to make sure you are doing it right.

Reasons for Closing a Bank Account

There are several reasons why someone may choose to close a bank account in the USA, including:

  • Fees. Bank accounts often come with fees, such as monthly maintenance fees, overdraft fees, and ATM fees. If you find that the fees associated with your account are too high, you may choose to close the old account and open a new bank account with lower fees.
  • Poor customer service. If you're dissatisfied with the customer service you've received from your bank, you may choose to close the account and find a new bank that better meets your needs.
  • Inconvenient location. If you've moved to a new area and your bank doesn't have branches or ATMs nearby, you may choose to close the account and open a new one with a bank that has a more convenient location.
  • Better interest rates or features. If you've found a new bank that offers better interest rates or features than your current bank, you may choose to close the account and open a new one with the new bank.
  • Fraud or security concerns. If you've had concerns about fraud or security with your bank account, you may choose to close the old account and open a new one with a bank that provides better security and protection.
  • Multiple accounts. If you have multiple bank accounts, you may choose to close one or more of the accounts to simplify your finances and reduce the number of accounts you need to manage.
  • Switching to a different type of account. If you've decided to switch to a different type of bank account, such as a checking account or a money market account, you may close your old account and open a new checking account with the new type of account.
  • Unsatisfactory account features. Your current bank account may not offer the features you need, such as mobile banking, online bill pay, or overdraft protection. Close the bank account and open a new one with a bank that offers the features you need.
  • Combining accounts. If you have multiple bank accounts, you may choose to close one or more of the accounts and consolidate the funds into a single account for easier management.
  • No longer needing the account. If you no longer need a bank account for a specific purpose, such as a joint account with a former partner or a business account no longer in use, you may choose to close the account.

How to Close a Bank Account

Closing a bank account in the USA typically involves the following steps:

  1. Check for outstanding balances. Before closing a bank account, make sure there are no outstanding balances or overdrafts that need to be paid. If there are, make sure to pay them off in full before proceeding.
  2. Notify your bank. Contact your bank and let them know that you want to close your account. Some banks may require that you visit a branch in person to close the account, while others may allow you to close the account over the phone or through online banking.
  3. Transfer money to a new account. If you have automatic payments or direct deposits linked to the account, make sure to transfer these to a new account before closing the old one. You can also withdraw any remaining funds and deposit them into a new account.
  4. Cancel automatic payments. If you have any automatic payments set up through the account, such as bill payments or transfers to other accounts, make sure to cancel these before closing the account. You can do this through online banking or by contacting the company or financial institution that is making the payment.
  5. Request a final statement. Ask your bank for a final statement to confirm that there are no outstanding balances or transactions that need to be processed before closing the account.
  6. Close the account. Once you've transferred your funds, canceled automatic payments, and received a final statement, you're ready to close the account. Your bank will provide a form that you need to fill out to officially close the account.
  7. Verify the account has been closed. After the account has been closed, check your credit report and bank statements to make sure that the account has been properly closed and that there are no additional transactions or balances associated with the account.

Closing a bank account hurt your credit report, as it may affect your credit utilization ratio. Keep an eye on your credit report after closing the account to make sure there are no negative impacts. Additionally, before closing an account, make sure to consider any potential impact on any financial products or services linked to the account, such as loans or mortgages, as these may be affected by the account closures.

Can you Close a Bank Account Online?

You can close an old bank account online. The process of closing a bank account online is typically quicker and more convenient than visiting a bank branch in person. The steps to close a bank account online in the USA are similar to those for closing an account in person:

  1. Check for outstanding balances. Before closing a bank account, make sure there are no outstanding balances or overdrafts that need to be paid. If there are, make sure to pay them off in full before proceeding.
  2. Log in to online banking. Access your bank's online banking platform to initiate the process of closing your checking or savings account.
  3. Find the account closure option. Look for the option to close your account in the account settings or customer service section of the online banking platform.
  4. Transfer funds to a new account. If you have automatic payments or direct deposits linked to the account, make sure to transfer these to a new account before closing the old one. You can also withdraw any remaining funds and deposit them into a new account.
  5. Cancel automatic payments. If you have any automatic payments set up through the account, such as bill payments or transfers to other accounts, make sure to cancel these before closing the account. You can typically do this through online banking or by contacting the company or financial institution that is making the payment.
  6. Request a final statement. Ask your bank for a final statement to confirm that there are no outstanding balances or transactions that need to be processed before closing the account. This may be done through the online banking platform or by contacting customer service.
  7. Close the account. Follow the steps provided by your bank to officially close the account. This may involve filling out an online form or submitting a request through the online banking platform.
  8. Verify the account has been closed. After the account has been closed, check your credit report and bank statements to make sure that the account has been properly closed and that there are no additional transactions or balances associated with the account.

Before closing a bank account online, make sure to carefully read the terms and conditions associated with the account closure process. 

How to Reopen a Closed Bank Account

You can reopen a bank account under certain circumstances. The process of reopening a closed bank account depends on the reason why the account was closed and the policies and procedures of the specific bank where the account was held.

  1. Check the reason for the closure. The first step in reopening a closed bank account is to determine why the account was closed. If the account was closed due to inactivity, for example, the process of reopening the account will be different from if the account was closed due to a negative balance or fraudulent activity.
  2. Contact the bank. Contact the bank where the account was held and ask if it is possible to reopen the account. Be prepared to provide information about the reason for the account closure and any changes that have occurred since the account was closed.
  3. Provide the required information. If your bank agrees to reopen the account, you may need to provide additional information to satisfy the bank's security and compliance requirements. This may include a valid government-issued ID, proof of income, and current contact information.
  4. Reactivate automatic payments and direct deposit. If you had automatic payments or direct deposits linked to the closed account, you would need to reactivate these after the account has been reopened. Contact the companies or financial institutions that were making the payments and provide the information necessary to reactivate these services.
  5. Reestablish credit history. If your closed bank account had a negative balance or was closed due to fraudulent activity, you may need to work with the bank to reestablish your credit history. This may involve paying off any outstanding debts and demonstrating a history of responsible financial management.
  6. Wait for account activation. After you have provided the necessary information and taken the necessary steps, wait for the bank to process your request and activate the reopened account.

Not all banks allow customers to reopen closed accounts, and even if they do, the process can be time-consuming and may require effort on your part. Before attempting to reopen a closed bank account, make sure to understand the bank's policies and procedures and be prepared to provide the information, and take the steps necessary to successfully reopen the account.

FAQ

How do I close a bank account permanently?

To close a bank account permanently, you will need to visit your bank's branch in person or send a written request to your bank. Provide the bank with your account information and specify that you want to close the account permanently. You may also need to settle any outstanding balances or transfer any remaining funds to another account. Once the bank has processed the request, they will provide confirmation of the account closure and return any remaining cards or materials associated with the account.

Is there a fee for closing a bank account?

Yes, some banks may charge a fee for closing a bank account, depending on the type of account and the bank's policies. There may be an early account closure fee. It's best to check with your bank to confirm their specific fees and requirements for closing a bank account.

What happens when you close a bank account with money in it?

When you close a bank account that still has money in it, the bank will process the request and distribute the remaining funds to you via a check, electronic transfer, or another method you have authorized. Before closing the account, ensure that any outstanding checks have cleared and that any automatic payments or direct deposits have been redirected to a new account. If you have a negative balance in the account, you may be charged fees and may need to pay off the negative amount before closing.

Do banks care if you close your account?

Banks may not care if you close your account as they often have a large number of customers. However, they may try to retain you as a customer by offering incentives or asking why you want to close the account. Ultimately, it is up to the individual to decide whether to close their bank account.
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