You must close your old checking account when you relocate or change banks. Although this is a very straightforward procedure, there are some precautions you should take to ensure that you cancel your account correctly and avoid any overdraft fees or other issues. To effectively close your checking account, follow these simple steps.
Create a New Account
To begin, you'll need to open a new checking account. When you start shifting over direct deposits, debits, and other payments, you'll have an account in place. Consider the bank's accessibility to your house (or simplicity of online banking), account minimums and fees, and any additional accounts you might wish to combine with your checking accounts, such as a savings account or even a money market account or certificates of deposit when picking a new bank (CD).Allow All Charges to Clear
After that, you'll need to stop using your checking account for payments and wait for all outstanding charges to clear before closing it. Make careful to look up whatever transactions are still pending on the internet. It's also a good idea to keep a running balance or go over your check register from your account's checkbook to see what's cleared and what's still pending. Next, cancel any automatic payments you've set up through your previous account; the last thing you want is an automated payment to go through on your old account, resulting in overdraft fees or, worse, the payment fails to go through. This may take a billing cycle or two, so you'll have to pay certain payments manually in the meanwhile. Make a note of your recurring payments, then cross them off as you cancel them in your old account and set them up in your new one.Transfer Your Funds
After you've closed your account, the following step is to move your funds from your old checking account to your new checking account. Again, keep an eye on any pending charges on your old account to avoid overdrawing it and incurring fines. Also, check to see whether your old bank has a transfer limit, as many banks limit the amount of money you can move or withdraw at once. You're ready to close your account once everything has cleared. If you do not go in person, you will need to write a letter to the bank requesting that your account be closed. Your name, address, and account number are all essential details to include. You can also request that a letter be issued to you confirming the closure of your account.Close Related Accounts
Because many checking accounts include a free savings account, it's also vital to close any associated accounts when ending your checking account. In the same letter that you use to shut your bank account, you can request that additional accounts be closed. It's critical to close any other accounts associated with your name, as this could pose problems if your identity is stolen or someone attempts to restart the account in your name.Throw away your checks and debit card.
It's also critical that you take precautions to avoid inadvertently using old checks or debit cards or allowing someone else to do so fraudulently. Shred any remaining checks and cut up your debit card once you've requested that your account be canceled. Make sure the shreddings are appropriately disposed of. You might even wish to take advantage of a shred day in your town or city when residents can adequately shred and dispose of sensitive papers.Keep Records on File
Keep your confirmation letter with your account information on file for a few years after receiving confirmation that your account has been canceled. You'll want to save this for a few years if your old account is used fraudulently. Keep an eye on your ChexSystems report to ensure that the closed account or bank does not reopen. If you see any charges on that account or with your previous bank, you should contact them immediately. Final tips:- Before you close your existing account, create a new one. This ensures that you have continuous access to your funds. It's particularly useful for relocating because it allows you to keep your finances available to pay for movers, rental cars, and other moving-related expenses.
- Make sure that all direct payments, such as your paycheck, automated savings transfers, and withdrawals from your account are turned off. This should be done around a month before your account is closed.
- Make sure you're aware of the withdrawal and transfer limits. Consider the minimum balance requirements and fees that your new bank may impose when looking for a new account. Gym membership fees, insurance payments, and other home costs are examples.
Frequently Asked Questions (FAQs)
When it comes to closing a bank account, how long does it take?
Closing an account can be done fast, especially if you've done your homework ahead of time to ensure a smooth transition. The most time-consuming phase is transferring funds to a new account. This could take up to a week. If your account has already been emptied, it should just take a few minutes to have the conversation or fill out the form that shuts your account.What is the cost of closing a bank account?
When you withdraw money from a CD before it matures, you will usually be charged a fee. The majority of institutions will allow you to close your account for no charge. However, if your account has timed deposits, you may be charged fees for early withdrawals.What is the procedure for closing a joint bank account?
Closing a shared bank account follows the same steps as closing a single-owner account. Depending on the institution, each joint owner may be required to confirm the closure independently. Other financial companies allow any joint owner to shut the account and remove as much money as they wish.