Planning to close your bank account? Here is how to avoid charges (2024)

FAQs

Planning to close your bank account? Here is how to avoid charges? ›

To avoid fees, make sure you transfer all scheduled payments, deposits and withdrawals to your new account.

Some banks may charge a closure fee, especially if you close the account soon after opening it or if it falls below the required minimum balance. 7. Dispose of your Chequebook and Debit Card securely : After closing your account, securely dispose of any physical components like your chequebook and debit card.

Does it cost anything to close a bank account? There should not be a fee to close a bank account. However, if your account has a negative balance, you will need to bring the balance up to zero before you can close the account.

Banks have different timelines (usually 90 to 180 days) for how long you have to keep your account open before closing it without a fee, which can be up to $25. Check what your bank's rules are before you move forward with canceling your account.

Visit the nearest branch and submit the closure form in person. You have to show the KYC documents, like Aadhar and PAN, of all the account signatories while submitting the account closure request. You need to submit all the unused cheque leaves and your passbook to the bank at the time of closing the Current Account.

You'll need to have some documentation prepared for the application, including a government-issued ID, Social Security number and information from another bank account to transfer funds over.

Closing an account may save you money in annual fees, or reduce the risk of fraud on those accounts, but closing the wrong accounts could actually harm your credit score. Check your credit reports online to see your account status before you close accounts to help your credit score.

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.

Your bank account could be closed by your bank for many reasons, including inactivity or low usage. Banks aren't required to give notice when they close an account. Consult your bank's deposit account agreement for guidelines on when an account might be closed.

How to avoid account closure fees? ›

Other banks, however, require you to keep the account open for up to 180 days to avoid the fee. You can find out whether a given bank charges an early account closure fee by looking at the bank's fee schedule, which is often relatively easy to find when you're on the bank's website.

If you still have money in the account after everything clears, withdraw the money or transfer it to your new account. If your bank account has a minimum balance requirement, only transfer money out of the account when you're ready to close it so that you're not charged a monthly maintenance fee.

To carry out the account closure process, an account holder needs to visit the branch personally. At the branch, you need to submit an account closure form along with the de-linking form, unused cheque book and debit card. In the form, you need to mention the reason for the closure of the bank account.

Avoid closure charges by waiting for right time: You may have to pay a penalty if a new account is closed before a particular time period. “Sometimes banks charge a fee for closing an account within a year of its opening. To avoid paying account closure charges, you should wait at least one year,” says Shetty.

Some banks may allow you to close your bank account online, but a call to your local branch or customer service can help you determine the best process.

You can close a bank account by visiting a bank branch, submitting a written cancellation request or calling customer service.

Generally, a recurring charge is based on an agreement between you, as the account holder, and the merchant. Because the bank was not a party to that agreement, the bank cannot cancel it for you. You need to instruct the merchant to stop debiting your account before you close the account.

An early account closure fee is a predetermined amount of money — usually between $5 and $50 — that the bank will charge you for closing your account soon after opening it. Of the banks that charge this fee, many will impose it upon customers who close their accounts within 90 days of opening.

Closing a bank account won't hurt your credit, as long as your account is in good standing. If you have a negative balance with the bank, you'll want to resolve that balance before closing the account. Negative bank balances and missed payments on credit cards tied to the bank account will affect your credit score.

Accounts that have been open for a long time may have a positive impact on your credit score so if you decide to close some accounts to help your credit score, start by looking at inactive accounts that you no longer use. The general guidance is that you should aim to have fewer, well-managed credit accounts.