For many consumers, their checking account is the center of their financial existence because it’s where paychecks are deposited, bills are paid and spending money is stored. Because there is so many transactions flowing in and out of these accounts, it’s crucial to close your checking account properly in order to avoid unwanted blunders, like overdrawing your account and missed payments, which could have a negative impact on your financial well being.
Before Closing Your Account
The amount of preparation that needs to be completed before closing an account depends on how extensively you use your account. If your checking account is used to pay bills or if you have direct deposit set up, it is critical to take the proper to switch recurring payments and automatic deposits or there could be undesirable consequences. Here are some tips to keep in mind when making a checking account transition:
Open and fund your new checking account first.
It’s a good idea to have your new checking account up and working before closing your existing account because it will make for an easier transition. Shop around on this site and apply for your new checking account before closing your existing one.
Switch over automatic transactions to your new account.
This step will take time so be prepared. Once your new account is opened and funded, automatic payments and direct deposits can now be enrolled to your new account. Keep in mind that altering your direct deposit and various recurring bill payments (i.e. mortgage payment, credit card payment) take time to and that’s why this is a tricky step to orchestrate. You want to make sure that you have the sufficient available funds in your account to cover the amount of money subtracted your account.
Keep in mind: If recurring payments aren’t switched over before closing the account, it is possible for the account to be reopened causing unwanted overdraft fees.
Closing Your Account
After setting up your new account and making sure the activity flowing in and out of the account is functioning properly you can now close your old account. Most institutions allow you to either go into a branch, or call customer service to close an account. Some institutions have a form that you can mail-in. This step won’t take more than ten to fifteen minutes, but whichever path you choose, here are some things to remember:
Have proper identification on hand.
In addition to your checking account number, you’ll need knowledge of personal information like your social security number and home address when closing an account so that institutions can be sure that there’s no foul play involved.
Be aware of account closing fees.
Some institutions charge a fee for closing a checking account. This fee is usually only assessed within the 90 day period of opening the account, but it’s an important to understand that these fees do exist.
After Closing Your Account
Within a few days of closing your account, you’ll receive a confirmation letter in the mail that you should keep in your records. Soon after, you’ll also receive a cashier’s check or some other kind of documentation depending on how your balance was refunded to you. At this point, it is wise to shred paper checks and debit cards associated with the account to avoid any future mishandling and confusion.