Your bank account is like your financial home. It’s that one constant you rely on for tracking your money going in and out. When that bank account isn’t giving you what you need, though, it’s time to move on.
If you’re not sure how to close a bank account or whether you should close it, let’s take a look into the process.
Why You Might Want to Close a Bank Account
There are plenty of reasons you might want to close a bank account, including:
1. Account Fraud
If your credit card or debit card is stolen, you cancel the card and get a new one. It’s quick and easy.
If someone gets your bank account information, however, that’s a more permanent problem. They can access your money no matter how many debit cards you go through. The only way to fix this, is to close the account and use a different one.
2. Finding a Better Offer
Banks need to compete for your business. Are you unhappy with your current account’s fees and perks, or the service you’re getting from the bank? You can close the account and take your business elsewhere.
3. Making a Move
Some people use local banks to support smaller businesses. That’s a great reason to use a bank – until you decide to move out of the area.
While most banks offer online banking from anywhere, you might like having a physical location available. If the local bank doesn’t have ATMs near your new home, you’ll also pay more in ATM fees. For that reason, it may be time to switch banks.
4. Family Changes
Perhaps you have a joint account with your spouse but you’re going through a divorce or separation. Or as a child, you may have had a joint bank account with your parents but now you’re an adult. In either situation, it could be best to close the joint account and open a new one of your own.
Any of the above are common reasons for closing a bank account, and there are many more. Regardless of your reason, there are clear steps you need to take to safely and correctly close your account.
How to Close a Bank Account: Step By Step
If you’re switching bank accounts, especially if we’re talking about your primary bank account, there are many moving pieces. Follow these steps for a clear transition.
1. Find a New Account
You always want to have your new account set up before you close your old one to make the transition simpler. If you already have another open account you want to use, you’re ready to go!
If not, it’s time to start shopping. Check for several factors and features while shopping for a bank account. You’ll want to look at the bank’s customer service record as well as the account’s fees, perks, interest rates, and more.
A word to the wise: focus on long-term benefits over short-term ones. One bank might offer a $100 sign-on bonus but charge $12 per month in fees, for example. If you choose a bank with no bonus but also no maintenance fees, your choice pays off over time.
When you find your new financial home, open the account, and transfer some money so you can start using it. It might take time to complete the process of opening the account, though. You can use a credit card or line of credit in the meantime to keep everything in line.
2. Take a Transaction Inventory
Now that you’ve stopped using your old bank account, take a close look at all open transactions. Check your online banking for transactions that are still processing.
If you use checks, verify whether you have any outstanding. Write down the amount for all pending transactions and open checks. This way, you’ll know how much to keep in the account.
3. Transfer Your Funds
Your money now has a place to go and you know how much you need to keep in your old account for the time being. It’s time to make the switch.
Talk to both your old bank and your new bank about their policies for transferring your funds. They may have limits on the number of transfers you can make or how much money you can transfer at one time.
When you have your answers, transfer the money to your new bank account. Leave enough in your old account to cover pending transactions, plus a bit extra to be safe.
4. Switch Your Automation
Chances are that you have some type of automation in your finances, whether it’s direct deposit or automatic payments. Make a list of all of them and change them to your new account.
Sometimes this can take a while, so ask for the processing time for each transition. If your paychecks are direct deposited, ask your payroll department for confirmation when the change is completed.
5. Do the Paperwork
Now for the nitty-gritty: the actual paperwork to close the account. Notify your old bank that you’d like to close the account and ask what the process entails.
They’ll send you the paperwork you need to fill out. It may need to be notarized so you might need to find a notary in your area.
Be sure to keep a detailed record of the entire process because issues can arise along the way. Record the dates and times of all your interactions with the bank. Make a note of each representative’s name when you speak with them.
When the process is done, the bank will give you any remaining money that was in the closed account so you can deposit it to your new account.
6. Destroy the Remnants
Finally, you can get rid of any debit cards and checks related to your old account. This is a critical step. If someone tries to use those cards or checks in your name, there could be issues so it’s best to be on the safe side.
New Bank Account, New You
Whether your new bank account is an upgrade, a way to protect your finances, or the result of a new stage in your life, it’s a big transition. The steps above for how to close a bank account will help you cruise through the process more smoothly and with less stress.
If you want a line of credit to help with the transition, apply for your credit today.
Featured Photo by Kelly Sikkema on Unsplash.