If the time has come in your life for you to relocate, or you have found a better bank, you will have to close your checking account. While this can seem like a daunting challenge, it is a relatively simple process. There are, however, a few tips and tricks to make this transition between banks even smoother. You should be sure to close your account correctly so you aren’t surprised by any overdraft expenses or additional fees.
Step 1: Open Your New Account
Make sure you have opened a new checking account before closing your old one. By doing this, you are ensuring that you have an existing account when it is time to move your debits, direct deposits, and other payments from your former account.
When deciding on a new bank, be sure to think about the bank’s proximity to you and try to find the nearest bank to your primary location. If you are not choosing a physical bank, consider how convenient online banking web or mobile application would be for you. Be sure to do your research on the new bank’s account minimums and fees, and think about whether or not you want to open another account in addition to a checking account. You may want to open a savings account, CD (certificate of deposit), or money market account.
Step 2: Allow All Charges to Clear
Stop using the account you want to close for payments. Allow each existing charge to totally clear before closing the account for good. Check online to see if you still have outstanding transactions. Be sure to thoroughly examine your check register from your checkbook for your account so that you can ensure all payments have cleared completely before canceling your account. You can also keep a running balance.
If you have set up automatic payments through your old account, be sure to cancel them or transfer them to your new account. You don’t want to be stuck with overdraft fees if you make a payment through your old account. You may need to wait for a billing cycle (or two, just to be safe) and pay your bills manually for a while.
Tip: List your recurring expenses, and tick them off once you are sure they are canceled through your old account and properly set up for your new checking account.
Step 3: Move Your Money
When closing your checking account, move your money into the new account as soon as possible. Be very cautious of any pending charges from your old account. If you don’t, you will be susceptible to overdraft fees and additional fees. Check and see if your old bank has any transfer limits, as many banks limit the amount of cash you can transfer or withdrawal at any given time.
When every expense on your account has cleared, you can safely close the account. You can either close the account in-person at your former bank or send a letter requesting its closure. If you decide to go the letter route, be sure to include your home address, full name, and account number. You can request that the bank sends you a letter to confirm your account has been closed.
Step 4: Close Related Accounts
When closing your checking account, be totally sure that any other accounts opened in your name are closed. You may have a savings account in addition to your checking account at your old bank since many banks offer a free savings account. Request that all accounts opened in your name are closed in the letter.
Important: If you leave an account open, it is vulnerable to identity theft. If someone pretends to be you, they can gain access to the account. This is why it is so crucial to ensure that all accounts are closed.
What else should you do after closing your bank account?
Destroy Your Checks and Debit Cards
It is important that you do not use checks and debit cards tied to your old account after it is closed. It is also important to prevent anyone else from using this account, as this would be fraudulent.
Once you have requested the closure of your account. shred any leftover paper checks and cut up your debit card. Make sure the pieces are properly disposed of. If your community hosts a shred day where citizens can destroy sensitive documents, you can destroy checks and debit cards there.
Keep Records on File
After you have gotten word that your account has been terminated, do not throw the letter away. It can be useful in the future in case fraudulent activity is detected on your account.
Tip: Monitor your ChexSystems report to ensure that no one else has access to your account. If you see any charges or activity, contact your bank immediately so they can resolve the situation.
- Open your new account before cancelling the old one. This way, you always have access to your money. This is especially helpful if you are in the process of moving, since you will likely have to pay for rental cars, movers, and other related services.
- Ensure that all direct deposits to the old account (like your paychecks, automatic savings transfers, and withdrawals) are canceled. Try to do all of this approximately a month before you close your account. This includes entertainment subscriptions, insurance payments, gym fees, and household bills.
- When searching for a new account, do your research on the minimum balance requirements and expenses associated with the new bank. Always be sure to consider your new banks withdrawal and transfer limits.