Not all bank accounts are set up with your best interests in mind. Your current bank account might come with high monthly fees, present no interest-earning opportunities, or have a clumsy interface that makes it difficult to manage your funds. All of these are perfectly valid reasons why you might want to know how to close a bank account.
If you’ve decided to part ways with your current bank, closing down your account is an essential part of the process. With that in mind, we will explore how to close a bank account today.
How to close a bank account
Closing a bank account should be a simple process. After all, it’s easy enough to open a bank account. Why shouldn’t it be easy to close it?
Speaking from personal experience, shutting down a bank account isn’t a simple one-click process. Instead, it takes several steps to close an account properly.
If you are closing an account, below is a step-by-step guide to follow through the process.
1. Transfer your funds to another bank account
The first step of the process is to move your funds over to another bank account. For some, this means moving your funds into an existing account in an effort to consolidate your financial life.
But for others, this means opening an entirely new bank account. This depends on your answer to the question, “How many bank accounts should I have?”
If selecting an entirely new bank account, take some time to find the right fit for your situation. You don’t want to get stuck switching bank accounts again anytime soon. A few things to look for include any account fees, minimum balance requirements, and also accessibility.
When you have the new bank account set up, you can transfer your funds from the existing account into this new account.
2. Move all recurring payments to a new bank account
Once all of your funds are transferred, it’s time to let everyone who sends you money know about the change. If you have any automated payments coming to your bank account, make sure the person paying you has your new bank account information.
For example, you might need to change your recurring payment information from your investment account or if you get money from any unique side hustles.
3. Update your direct deposit information
When finding out how to close a bank account, you still need to make sure you can get paid as usual.
If you are paid for the work you do by direct deposit, it’s critical to let your employer know about your new bank account. Usually, this part of the process is as simple as filling out a new form with your company’s Human Resources department.
Other sources of directly deposited funds, like government benefits, will also need to know about this new bank account. If you aren’t sure who should get this information, comb through your bank statements to find out who deposits money into your account automatically.
4. Update your direct debit information for any automated bills
You might be someone who has decided to automate your finances. If you take advantage of automatic payments for any of your bills, you’ll need to update the payment information with your new bank account.
Start by making a list of all of your automatic payments. Then work through the list methodically to avoid missing a bill 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 also car payments.
5. Wait a full month
It’s easy to miss an automatic payment. Instead of moving forward with your account closure immediately, wait a full month to confirm that nothing has slipped through the cracks.
During this month, monitor your original bank account for any transactions. If you forgot about a particular recurring payment, you’ll have the chance to update it. Also, make sure your paycheck hits the right account.
Once all pending payments have cleared your account, you can move forward with closing your account confidently.
6. File paperwork to close the account
Most banks require you to fill out a form in writing to close your account. Not only will you need to submit the written form, but you’ll likely need to sign the document.
In some cases, your bank will require you to sign the document in front of a notary.
While some banks may allow you to close your account entirely online, others require you to make a visit to your local branch.
7. Get a confirmation
When you submit the paperwork to close your bank account, ask a bank representative for a written document that confirms the account closure.
If the bank account pops up on your radar in the future, you’ll have proof that the account was closed with your permission.
Expert tip
When it comes to closing a bank account, be prepared for stalling tactics. I went through the painful process of closing an account at a major bank. It wasn’t a smooth process. Although the bank tried to stall at every turn, I eventually got the account closed.
As you navigate the process, be confident in your decision. Don’t let the bank try to sway you into staying. After all, there is a reason you are making this switch.
Can you close a bank account online?
Some banks and financial institutions will allow you to close your bank account online. It might be as simple as submitting a form through your bank’s online platform.
But other banks, specifically large institutions with a brick-and-mortar presence, are likely to require an in-person component to closing your account.
Do you have to pay a fee for closing a bank account?
If you close your account within 90 days, you might encounter an early account closure fee. But in general, you shouldn’t expect to pay a fee for closing your bank account.
If you are encountering a fee to close your bank account, it’s further proof that it’s time to part ways with your bank. Working with a bank that nickels and dimes you at every turn usually isn’t a good move for your financial situation.
What to do before closing your account?
If you’ve decided to close your bank account, evaluate why you want to make a switch. Simplifying your finances is a very valid 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. Or perhaps you want to tap into higher APYS. Whatever your reason, look for a bank that presents a solution in your new bank account.
Is there a negative to closing a bank account?
The process of closing your account might not be enjoyable. But the end result is usually very positive.
You’ll walk away from a potentially fee-riddled account. And you’ll hopefully step into a new bank account that offers you more bang for your buck.
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Understanding how to close a bank account can help you with your money!
It’s possible to close your bank account in a few simple steps. Tackle each step with patience to move through the process with the best results.
While it’s not a process you can complete in one click, it’s still worth pursuing if you want to switch up your banking situation. As you move forward, carefully research your other banking options.
When you find a bank account that suits your needs, initiate the closing process on your current account. Doing this will help you to experience greater financial wellness and also keep your financial house in order.
