How to Close a Bank Account: Step-by-Step Guide

Don’t know how to cancel a bank account? Whatever your reasons for doing so, account closure can be a stressful affair if you don’t know what you’re doing. So, today, we brought you a guide to make the process a bit easier on your mental wellbeing. Keep reading to find out more.

Why Would You Close a Bank Account?

Technically, you don't need a specific reason to cancel your bank account. However, in practice, bank customers rarely do so on a whim. The common reasons for account closure are:

• Moving to another region;
• Switching to the option with better rates;
• Unwillingness to pay high fees;
• The need for customer service or specific features;
• Opening a joint account;
• Consolidating your accounts.

The reasons vary: perhaps you are no longer satisfied with the terms offered, or forced to look for another bank as you move to another state. One way or another, you should carefully weigh all the pros and cons and only then close the account.

How to Close a Bank Account?

Although closing a bank account is not that hard, it still requires more than just sending a request to your bank. Your task is to ensure that the process is successful and that your money stays safe. You should also research any specific requirements your bank may have. In most cases, you’ll need to go through the following steps:

1. Step 1 — Open a new bank account. Before closing an existing account, you should make sure that you have a place to keep your money safe and receive payments. When choosing a new bank, you should consider its terms, rates, and commissions — all the usual rules apply here. Only when you have a new active account should you proceed to the next step.
2. Step 2 — Take care of your existing payments and deposits. Now, your task is to redirect all your scheduled payments to the new account. You should cancel any recurring payments on the old account and set them up on the new one, including mortgages, insurance payments, personal loans, monthly subscriptions, memberships, and utility bills.
3. Step 3 — Take care of your money. Once you have completed all the necessary transactions, you can withdraw the remaining money or transfer it to your new account. Just don’t forget about the minimum balance requirement if you want to avoid service fees.
4. Step 4 — Contact your bank representatives. In most cases, you can close down a bank account online, but you may need to call your bank or even visit a branch. Depending on your bank’s policy, you may need to fill out a form or submit a written request. If you have fulfilled all your obligations to the bank and there are no unresolved issues, your account will be canceled.
5. Step 5 — Closing bank accounts via mail (optional). Alternatively, you can write a letter to your bank asking them to cancel your account. Usually, you’ll be required to provide your full name and account number. Now, all you have to do is wait for a written confirmation that the account has been successfully closed.

The amount of time you’ll have to wait for full closure varies depending on the bank in question and the method you choose. However, if you have taken care of your money and completed all the necessary transactions, you can usually complete the process in 1–3 business days.

Closing Specific Bank Account Types

Not all cancellation requests are processed in the same way, and depending on the account type you use, additional rules may apply. Let’s look at some cases that do not fall under the standard closure procedure.

Joint Account

If you are closing a joint account, you may need to provide signatures from both owners. However, this is not always the case. Many banks only require permission from one owner to close a joint account. But if you are planning to do this online, you should make sure you have a signed request from both owners.

Child’s Account

When you reach adulthood, you may need to manually update your child’s account once they reach legal age. Although some banks automate this process, it is still advisable to control the closure.

Inactive Account

It’s not possible to close an inactive account, so there are a few things you need to do first. Contact the bank representatives or use your online banking to learn how you can reactivate the account. Only after meeting the requirement for account activation can you cancel it using one of the standard methods.

Overdrawn Account

A bank simply won’t permit you to close an account with a negative balance. Obviously, you will need to bring your balance into positive numbers first.

Deceased Person’s Account

This case is perhaps the most complex of all. How the bank account of a deceased person is handled depends on how they managed it during their lifetime and whether they took care to transfer the rights to their savings. If you are dealing with this scenario, you should hire a lawyer.

Can You Close a Bank Account Online?

To make life a bit easier for their ex-clients, most financial institutions allow them to close bank accounts online. This option is always available for online banks — you can close your account either via email or live chat support. In any case, you’d still have to contact your bank representatives to discuss any potential issues.

How Much Does It Cost to Close a Bank Account?

By default, closing a bank account is absolutely free. However, the same cannot be said about the deposit ones, as early withdrawal of funds usually comes with penalties.

Final Thoughts

Whether you want to switch banks for better terms or are forced to change banks because you are moving, closing your current account is nothing to be afraid of. However, there are a few things you should consider to avoid hassles or fees.

First, make sure you have a place to transfer and store your money. Second, document all communications with bank representatives. Third, once your bank account is closed, you should dispose of all cards linked to it for security reasons. If you stick to this plan, you'll close your account quickly and worry-free.