Closing a bank account when you want to switch over to a new one comes with a lot of do’s and don’ts, which might often surprise you. Even with the rising popularity of banking through online portals the closing of a bank account relies on a paper trail. We look at how to close a bank account below and the important points, which you should take into account when dealing with bank related paperwork.Below we also examine how closing a bank account instead of keeping it open with a minimum required balance, is beneficial over the long term.
Find a new bank and open an account
Before closing a bank account it is vital that you have an existing account which can be used as an alternative. If you do not have an alternate account, then consider selecting a new bank that provides a savings or checking account with favorable terms.
Link deposits and payments to the new account
Any existing deposits and payment that happen automatically to or from your bank account have to be transferred before its closure. After the closure of an account happens the payments that are taken automatically from it could cause it to reactivate and reopen. This automatic reopening of an account can result in you having to pay fees that you normally would not have to when an account is closed. So ensuring that automatic deposits and payments are removed from an all account is crucial before closing it. Also ensure that you do the shifting of these deposits/payments weeks in advance and that they go through at least once on the new account, to ensure that you get your salary on time. Additionally in case any pre-authorized payments on bills are linked to your account, you can make sure they are going through properly on the new account before closing the old account.
Moving money from the old account to the new
Bank accounts often require a minimum balance and fees for mobile alerts and debits cards can eat into it. Maintaining a minimum balance,instead of closing an account, is therefore troublesome. When closing an account the money in it will have to be moved out via an electronic transfer or check. You will additionally have to transfer money in phases to the new account if your old account has a large balance which exceeds the daily transfer limit. So writing a check to transfer the money or withdrawing hard cash and then moving it to the new account should be considered.
Stop writing checks for the old account
Ensure that you are not writing checks that are drawn on the old account. Additionally if you have checks that need to be submitted keep them on hold. Finally if checks related to the old account have not been submitted to the bank, wait for them to be cleared.
Close your account and get a letter
The procedure for closing an account should normally be finished in the bank’s offices. As part of such closure proceedings it is normal to get a letter stating that the account has been completely closed and is inactive.
Moving to a new bank account is an important aspect of closing an existing account. If you follow the correct procedure when closing a bank account you can avoid frequent trips to the bank and the possibility of checks being rejected.