How to Close a Bank Account

It’s free to close most bank accounts, but beware of early closeout fees

Fact checked by Brendan HarknessFact checked by Brendan Harkness

You can usually close a bank account online, by calling customer support, or by visiting a local branch. Be sure to transfer any deposited money out of the account first. The process typically takes just a few minutes.

When it comes to banking, you have plenty of options. Whether you want to move your money to another bank to take advantage of a new account bonus or you’re moving to an area your existing bank doesn’t serve, closing your bank account is a relatively easy process.

Key Takeaways

• Bank accounts can typically be closed online, by calling customer support, or by visiting a local branch.
• You can usually close a checking or savings account at any time, unless the account is overdrawn.
• Closing some accounts, such as certificates of deposit (CDs), may result in a penalty or early withdrawal fee.
• Closing a bank account won’t impact your credit unless it makes you miss pre-authorized bill payments.

How to Close a Checking Account

You can close a checking account at any time. To do so, follow these steps: 

1. Allow any automatic payments to clear: If you’ve set up any pre-scheduled transactions, let them go through before you close the account to avoid overdrafts, which could result in penalty fees.
2. Transfer funds to your new account: Move any money in the account to your new checking account.
3. Update your direct deposit and automatic payment details: Once your account is closed, you’ll no longer be able to receive direct deposit payments to it, and any scheduled payments from it won’t go through. To avoid delays in receiving your paycheck or paying bills, update your direct deposit or autopay details to your new checking account before closing the existing account. 
4. Review your account agreement: Your account agreement will explain the closure process and any fees that apply. In most cases, there is no fee unless you’re closing the account within a few weeks or months of opening it. You can typically view your account agreement online.
5. Contact your bank or credit union: Some banks allow you to close your account online, but some require you to call customer support or visit a local branch. In some cases, you may have to submit a letter—and some banks require the letter to be notarized. When you contact the bank or credit union, tell the representative you’d like to close the account. They will verify your information and complete the closure. 
6. Ask for confirmation: Before ending the call or leaving the branch, ask the representative for written or electronic confirmation of the account closure for your records.

The process is usually similar for joint checking accounts, and the account can usually be closed by either owner.

Warning

If your balance is zero but you don’t close the account, the bank will continue to charge you monthly account fees (if your account has such a fee) until you officially close it. In some cases, the bank may close the account for inactivity.

How to Close a Savings Account

To close a savings account, follow these steps:

1. Transfer funds: Before closing the account, transfer your money to a new account. If you’re looking to maximize interest, find a high-yield savings account. 
2. Contact your bank or credit union: Call your bank’s customer support department or visit a branch in person to close the account. In some cases, you may be able to close a savings account online, through your online banking portal.
3. Complete required documentation: Depending on your bank, you may need to fill out a form, and in some cases this form must be notarized. Some banks have notaries on staff.
4. Request confirmation: Ask for written or electronic confirmation of the bank account closure for your records.

Important

Closing a savings account is a relatively simple process, but it can be more complicated if you’re closing the account of a loved one who has passed away. In that scenario, you’ll likely need the death certificate and a legal document naming you as an executor or a court order from the probate court. 

How to Close a Certificate of Deposit Account

A certificate of deposit (CD) is a tool you can use to save money at a specific rate for a fixed period. When the CD matures, you can opt to withdraw your money or roll it into another CD. To close the CD and withdraw your funds, follow these steps:

1. Check the maturity date: CDs typically have terms between three months and 10 years. Your maturity date is when the CD’s term ends, allowing you to withdraw money without penalty. If you close your CD before the end of the term, you typically have to pay an early withdrawal fee, which means forfeiting accrued interest and/or paying a fee.
2. Review your agreement: As with other deposit accounts, banks can set their own policies for CD closures. Review your account agreement for specific instructions on how to withdraw your money and close the CD. 
3. Contact the bank: Reach out to the bank over the phone, online, or in person to close the account. 
4. Transfer funds: Designate where you’d like the funds to be transferred, such as your checking or savings account.

Want to put that money into a new high-paying CD? See our rankings of the best CD rates nationwide, in a variety of term lengths, to find a good home for your investment.

How to Close a Money Market Account

Money market accounts (MMAs) are interest-bearing accounts that usually pay a higher rate than traditional checking or savings accounts. They also allow account owners to make payments by check, debit card, or electronic transfer. 

Closing a money market account is similar to closing a checking account. Follow these steps: 

1. Update your payment details: If you receive direct deposits or send automatic payments with your money market account, update those transactions with your new account information. 
2. Transfer money: Transfer the funds in your money market account to your new bank account.
3. Review your account agreement: Review your account agreement to find out if you’ll need to follow specific steps to close your money market account. Some banks require you to send a notarized letter or file a written request.
4. Contact the bank: Follow the account agreement’s instructions to close the account. Typically, you can close the account over the phone or by visiting a branch.
5. Request confirmation of closure: It’s wise to request written or digital confirmation of the account closure for your records.

If your current MMA is no longer suitable and you’d like to replace it with a new, higher-paying account, check our list of the best money market account rates to see how much you could earn.

Why You May Need to Close a Bank Account

There are many reasons why you may need to close a bank account: 

• Your account has high monthly fees: Some accounts have monthly fees, which can be expensive. Switching to a no-fee account can be a smart way to save money. 
• You’re a victim of identity theft: If your personal information has been compromised, closing your bank account and opening a new one may be necessary to protect your finances. 
• You found a bank with better rates: Interest rates vary by bank or credit union, so switching to a different institution could help you earn more interest. Check our rankings of the best high-yield savings accounts, high-yield CDs, and high-yield MMAs for more information.
• You’re dissatisfied with your bank’s customer service: If your bank’s customer service team is unresponsive or unhelpful, switching to another institution can make it easier to manage financial issues. 
• You’re moving to another state: Some banks or credit unions only operate in specific areas, so you may need to switch to another bank if you move.

The process for canceling a credit card is different than closing a bank account, so learn how to close a credit card account safely, if necessary.

Can a Bank Close My Account?

Banks can close your account for any reason and without notice. Typical reasons for a bank closing your account include:

• Inactivity: Banks consider accounts “abandoned” after three to five years of no activity on the account, though this timing varies by state.  
• Negative balance: If your account is overdrawn, the bank may opt to close the account. 
• Policy violations: If you regularly exceed account limitations, such as the number of allowable withdrawals per month, the bank may close your account. 

Frequently Asked Questions (FAQs)

Is It Free to Close a Bank Account?

In general, there is no fee to close a bank account. However, there are two notable exceptions: 

• Early closeout fees: Some banks charge an early closeout fee if you close your account within a certain period after opening it. For example, M&T Bank charges a $50 fee if you close certain checking accounts within 180 days of opening. 
• CD early withdrawal penalties: If you withdraw money from a CD prior to its maturity date, you’ll have to pay an early withdrawal penalty. Typically, the penalty is equal to several months of interest, but read your agreement to be sure.

How Do You Close a Bank Account Online?

Some banks allow you to close an account online by signing into your online banking portal and requesting a closure. But not all banks permit online account closures, so you may have to call the bank or visit a local branch.

How Long Does It Take to Close a Bank Account?

In most cases, you can close a bank account fairly quickly. The timing may depend on whether your bank allows online account closure or whether you need to contact customer support by phone or in person. It’s best to open a new bank account to replace the one you’re closing before initiating the closure process.

What If You Close a Bank Account With Money In It?

If you close an account that still has money in it, the bank will deduct any fees that you owe and will typically issue a check for the remainder. Check your account agreement for details specific to your bank or ask customer support if you’re not sure.

Does Closing a Bank Account Hurt Your Credit?

By itself, closing a bank account won’t affect your credit. However, closing an account could become a problem if you forget to update your autopay information and miss a payment, such as your monthly credit card payment. The missed payment may be reported to the credit bureaus, which can damage your payment history and credit score. That’s why it’s important to check your scheduled payments before closing your account.

The Bottom Line

Whether you’re moving to a new location or want to take advantage of another bank’s high annual percentage yield (APY), you may need to close a bank account. Closing an account is a relatively simple process, and depending on your situation, you may be able to complete it online or over the phone within minutes.

To avoid any issues with receiving your paychecks or making automatic payments, update your payment details before closing the account, and request a written confirmation of the account closure for your records.

Read the original article on Investopedia.