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How To Close A Bank Account

How To Close A Bank Account

Closing a bank account is fairly simple, but there are several steps you need to do before you close the account. Skipping any of these might cost you fees or penalties or create problems with your direct deposits.

Open a New Account

Whether you are changing banks locally or across the country, you need a new account. Most financial institutions will let you open accounts online. Do some research and pick the bank or credit union that best suits your needs.

Banks can transfer money in several ways. There might be a small charge, but a bank to bank transfer is a simple, fast way to move money. Be careful about carrying large amounts of cash in your car. We’ll discuss the different transfer options in a few sections.

Make a List

In this step, make a list of all direct deposits, automatic or recurring payments. Write down the payment dates, each bill or deposit, and the amount.

Once you know the dates, you can figure out how much money you need to leave in the old account and how much and when money needs to be in your new account.

Change each payment individually to match your plan. Keep in mind it might take more than a month to get your payment accounts changed.

If you have direct deposits, have those updated. If you are changing jobs, your former employer will need to know where to send your final paycheck.

Balance Your Checkbook

Balance your checkbook or stop using your debit card. If you still use checks and one hasn’t cleared, leave enough money in the account to cover the uncleared check. This is a painful lesson to learn! The same goes for pending transactions on your debit card.

Transfer Funds

There are several ways to transfer funds from bank to bank. You’ll need several pieces in information – the routing and account numbers for the new bank. The new bank will generally run a test transfer for a couple of pennies to verify that the numbers are correct. 

There is a limit on how much money you can transfer at a time. Check with each bank to see what they allow.

If both accounts are in your name, most banks will allow a bank to bank transfers. It is generally free and takes two to three days but check with both banks to be certain. If you are transferring money into someone else’s account, you’ll need to do a wire transfer or use a P2P transfer.

Another option is to use P2P transfers. Paypal is the most familiar P2P transfer service. Venmo is another. There may be fees but these systems let you move money from account to account whether it is yours or not.

The final way is to write a check to yourself and deposit it into the new account. As we’ve stated before, try not to carry large amounts of cash. If you are stopped in a traffic stop, the money can be seized. If your car is robbed, you may lose the money and have no way of getting it back.

Closing the Account

Simply go into your bank and let them know. It might take a while, depending on how many payments are still coming out of the account. You can also close your bank account online or fill out a form to accomplish the deed. Get written verification that your account is closed.

If for some reason a payment comes through on the old account number, you’ll have a zombie account and will need to pay fees, close that account, and then make certain no more payment requests are pending.

How To Close a Savings Account

Closing a savings account is very easy. Close the account and transfer the money. You generally aren’t paying bills out of a savings account.

The Last Step

Destroy all checks, bank cards, debit cards associated with the old account. Using a closed account is fraud. Keep all your old statements for three years from the date of the record.

Final Word

Closing a bank account is a pretty easy task. Just follow the steps so you don’t bounce any payments and your direct deposits don’t go astray. This is a great time to take a look at different banking options and pick the one that is best for you.