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How to Close Your Bank Account

How to Close Your Bank Account

    It is normal to grow tired of your bank or find a new option that offers better conditions to serve your financial needs. When this happens, you might want to leave your bank to pursue a new one. The problem is that leaving a bank might look like a simple task, but that is not always the reality. The trouble, effort, and fees involved in closing your bank accounts can make the process quite complex. This often turns off many customers from changing banks. Luckily, a planned approach can facilitate the exit of a bank and make the whole experience smoother and less frightening.

    When changing banks, you can assure a smooth transition and avoid a lot of problems by following the right steps. In this article, you will have access to some tips on how to make the exit from your current bank easier and avoid as much as you can extra charges. This will not only save you money but also give you more freedom to pursue the best bank deal available for you.

    Why You Should Reconsider Your Current Bank

    From time to time, it can be nice to reconsider your current bank. Of course, you don’t necessarily need to change it. But people can get too comfortable in their banks and miss opportunities available at other financial institutions.

    Lately, many new banks and other financial institutions have been surging with competitive interest rates and better terms for their clients. If you have been in the same bank for many years and you are not even checking these new alternatives, you might be letting go of a great opportunity to enjoy the advantages they might offer, such as:

    • Higher interest rates
    • Lower to no fees
    • Better online and mobile service
    • More convenience
    • Better customer service
    • Better deals
    • Easier transfer processes

    These are only some of the advantages that you might miss by not even considering changing banks occasionally. Many new financial institutions are changing the banking industry with online-only services, such as Ally, crypto-based platforms, like Outlet, and other financial models. Sometimes you can even realize that a very traditional bank can offer better terms for you than the bank you have been using for the past years.

    Saying you should consider changing banks, however, doesn’t mean you should change banks. If you consider your options, analyzed the pros and cons, and still prefer your current bank…Great! One less thing to do. Just don’t let opportunities to improve your finances and convenience pass because you are too lazy to do it. Hopefully, this guide on how to leave your bank will give you some energy to make the effort if you’ve been wanting to.

    How to Close Your Bank Account

    So, if you analyzed your options and decided it is time to leave your present bank, there are a few easy steps that will make the experience smoother. Keep in mind that, if you have an account in a very traditional bank, the process might be a little more demanding – maybe remember that when choosing your next bank. Fortunately, this guide can smooth the process of leaving even for the most rigid banks. Thus, here are the steps of closing your current bank account:

    Find Your New Bank

    Before shutting down your old bank accounts, you should make sure you have a new bank ready to handle your money. If not, you may find yourself inconvenienced whenever you need to transfer money, pay a bill, or make investments without a banks account. Hence, avoid canceling your bank accounts and then start shopping for a new alternative. Finding a new financial institution to place your money in might take longer than you imagine. Take your time, find the ideal one that best fits your financial needs so you can then start the process of closing your current bank accounts.

    Open Your New Account

    Once you found the financial institution to which you want to transfer your money, open an account there. The most ideal situation is if the bank or alternative to it doesn’t demand any minimum deposit to open the account, or only demands a small one. This will allow you to organize yourself better before sending a large amount of money into it. If the option you chose does demand a relatively large minimum deposit, you will have to do it. But don’t transfer all your money to the new account just yet. There are a few steps to take before that.

    Review and Transfer Automatic Payments and Recurring Transactions

    Many customers automated many of their payments and recurring expenses. For example, you might have a bill that is automatically deducted from your bank account every month. Or you might have a mobile app that has the credit card of your current bank account registered for payments. Once you changed banks, you will have to also change these automated payments and recurring transactions.

    Some may be hampered by the task of reestablishing that automated flow of money. However, in most situations, this is as simple as changing your bank account number and routing number.

    Examine your bank statements from the previous six to twelve months to see which automatic transactions should be redirected to your new bank. Some examples of these transactions are:

    • Rent payments
    • Bill payments
    • Direct deposits
    • Automated cash transfers
    • Mobile app payments
    • Subscription payments

    There might be many other options that you should consider, depending on what you registered your current account to. You could also come across rare transactions that use your previous accounts. Then, allow two to three weeks for these automated transactions to be rerouted to your new bank accounts.

    Review and Transfer Any Form of Income You Receive

    You don’t want your hard-earned income to go to your old account. This can result in a messy process that can involve many parties and some time to be solved. Sometimes, a mistake like this can mean you will take longer to have access to your deserved income. Thus, don’t forget to notify whoever pays your salary to send the payments to your new bank account.

    If you work in a company, your employer should be notified of the change. The same is valid if you are an independent professional, in which case you will have to send your new bank information to all your clients. If you have your own company that hires you, make sure you change the bank information yourself.

    Transfer Your Funds from Your Old Account(s) to the New One(s)

    Once you've checked that automated transactions have been correctly redirected, you can begin moving your money to the new account(s). You don’t need to inform your previous bank that you are closing your accounts yet. In some cases, this might actually make this step of the process more difficult.

    If you have a lot of money in your old accounts, be aware of any withdrawal or transfer limitations. Many banks charge fees if you transfer too much at once. For those that don’t have that much money, an option to avoid these fees is to transfer the money gradually before closing the account for good. Some people take over a year to make the full bank transition. Just check if decreasing the balance won’t also result in fees on your previous bank, or if the new one demands a minimum balance. However, if the amount of money you have is very large, it might be impossible to avoid some fees.

    Close the Account and Request a Written Letter

    Now you can finally request that the old bank closes your accounts. Depending on your bank, you may need to go to a branch in person, contact a customer care number, or send a written request. If you haven't already moved your money out, you will get a check for the amounts in your accounts.

    Many customers have complained about "zombie" accounts, which arise when a bank reopens an account after a company tries to withdraw funds. Accounts that have been closed may be revived as a result of billing mistakes or consumers forgetting an automatic bill payment. Hence the importance of the previous steps of this guide. But it is normal to forget one thing or another. Thus, just in case any inconsistencies arise in the future, you should demand from your previous bank a written letter stating that your accounts are closed.

    Enjoy the Benefits of Your New Account

    You are all set! As you could see, even though transferring to a new bank account is not the easiest task, it is also not that impossible. By organizing yourself and following the steps of this guide, you will be able to do it without too much struggle. And all this to finally be able to enjoy the benefits and opportunities of your new chosen bank.

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