How to Close a Bank Account: Step by Step Guide

A woman looks upset as she handles her finances on her laptop while sitting on the floor.
Getty Images

You’ve been with the same bank for a long time, but perhaps it’s not the best fit for you anymore and you’re looking into some different options. Whether you’re switching bank accounts to take advantage of a good deal at another financial institution or just wanting to close an old account you don’t use much anymore, you can do it without incurring fees by following a few simple steps.

Follow this guide on closing a bank account so you can make a fresh start opening a new account without worry.

Reasons to Close a Bank Account

Not sure whether you really want to close your bank account? Here are a few reasons why finding a new bank might be a good idea.

  1. Dissatisfaction with your current bank. Perhaps you’ve had several bad experiences with customer service, or maybe they are raising fees on you and you can’t afford to stay.
  2. Convenience. If you’re moving and your current bank doesn’t have a branch in your new hometown, you might choose to switch to a bank that does.
  3. Better offers elsewhere. Sometimes, banks will have a bonus offer for signing up for a new account, such as free cash for opening an account, which may entice you to switch.
  4. Better interest rates. If your current bank’s interest rates leave a lot to be desired, you may choose to switch so you can earn more money on your savings account.
  5. Consolidation. If you have multiple accounts at different financial institutions, switching so all your accounts are under one roof can make your life more convenient.

5 Steps to Closing a Bank Account

It may seem like a simple chore but you’d be surprised how complicated it can be to close a bank account. For one, just think about how many auto-pay bills you’ve connected to the account.

Step 1: Open a New Account

Before you even contemplate closing your current bank account, you need to find a replacement. Failing to find a new bank before you ditch your old one could be one giant financial headache for you.

Finding a new bank might seem like a daunting task, but it doesn’t have to be. There are plenty of resources to help you choose a bank, whether you’re considering an online-only bank, a brick-and-mortar bank or a credit union. Once you have your new account open and ready, it’s time to work on closing your old account.

Step 2: Update Your Automatic Payments and Direct Deposits

Unless you like to live out of a checkbook, chances are you have some (if not all) of your bills paid automatically each month. Those recurring automatic bill payments are tied to your checking account, so if you close your account before you switch over your payment information to your new account, you’ll default on your payments.

At the least, that’ll mean late fees. But if you fail to pay something like your phone or internet bill, your provider may cut off service, which could be devastating if you rely on these for work. Usually there’s a grace period for good customers but you may not catch this for a while, especially if you’re in the process of moving and switching banks.

If your paychecks are dispersed into your bank account by direct deposit, you need to make sure you update that information with your employer, or anyone else who uses direct deposit to get money to you on a regular basis. You’ll need to provide your new account number, as well as the routing number of your new bank.

Whoever is paying you will want a voided check or something on bank letterhead that tells them the routing and account numbers. They likely won’t accept the number that you send via personal email. Don’t know where the account and routing numbers are on your check? Time to learn with this guide.

To make sure your direct deposits have switched correctly, keep your old account open for at least a month in case your employer made an error and your money is paid to your old account instead of the new one. Keep an eye on your bank statements to make sure everything is being deposited correctly. Once you know for sure that they have your new bank account info correct, you should be good to close your old one.

Step 3: Transfer Your Balance

Once you’ve opened your new checking account, it’s time to start transferring your money.

It’s a good idea to leave a bit of money in your old bank account for a short period to cover any payments you may have forgotten about. The last thing you want is to have an overdraft on your old bank account.

Make sure you transfer money from all your bank accounts, including checking and savings.

Once you’ve moved your money over to your new account, you might be tempted to cut ties with your old bank right away. But it’s a good idea to leave your old one open for a couple of months just to make sure you don’t have any lingering payments.

You might also leave a small amount of money ($100 to $200) in the account to cover any surprise bill payments to avoid overdraft fees.

Step 4: Contact Your Old Bank to Close Your Account

Once you feel confident that everything is in place with your new checking account, it’s time to begin the process of closing your old one.

Depending on the type of account you have (and your personal preferences), you can usually either close your account online or in person at a local branch.

Your bank might also require that you submit a written request to close this account. The notification letter should include your name, address and account number. If you have multiple accounts at the same bank, make sure you include the numbers of each account you want to close separately.

Step 5: Get Written Confirmation

In your written request to cancel your bank account, ask for the bank to provide you with written confirmation once the account or accounts are closed. Even if you receive a confirmation letter, it’s still wise to call the bank to double check that everything went through and you didn’t miss any instructions from them to finalize the closure.

After you close your account, your old bank might send you a paper check for any remaining balance from that account.

Make sure you deposit that check ASAP into your new account. Most financial institutions have a deposit function in their apps, but you can also take the check to a branch to deposit if you feel more comfortable that way.

After you’ve officially closed your account, check your last statement carefully. You want to make sure there aren’t any unexpected charges on there or ones you don’t recognize. If you see anything suspicious, contact your old bank immediately to resolve the issue.

Will Closing a Bank Account Hurt My Credit Score?

You probably know that closing a credit card or loan can have a small effect on your credit score. Luckily, closing a checking or savings account has absolutely no effect on your credit, as long as you don’t have a negative balance.

This story will help you learn to hunt for the red flags on your credit report that can cause trouble.

female banker helping with customer
Getty Images

Frequently Asked Questions (FAQs) About Closing a Bank Account

Throughout the process, you will probably have some questions about how to close a bank account or hear some terms you don’t understand. We’ve found the answers to the most commonly asked questions.

What Are Zombie Accounts?

Some banks automatically reopen closed accounts if a charge is made. This could happen if you forgot to change the details on one of your autopay bills, or if your request to change your auto bill details didn’t go through properly. If this happens, contact your old bank to discuss your options.

What Happens if I Have a Negative Balance?

If your old checking account has a negative balance, you will likely need to pay it off before the bank will let you close it. If you manage to close it without paying off your balance, the bank can send it to collections, which will show up on your credit report and hurt your credit score.

Can I Close My Bank Account Online?

Some banks will allow you to close your account online, but many require you to either call their customer support center or stop into a branch to close your account. You will need to check with your specific financial institution to see what they require for account closures.

Is It Bad to Close a Bank Account?

No, closing a bank account isn't bad, as long as you go about it the right way. It doesn't have an effect on your credit and it shouldn't cost you anything to quit your bank. That applies whether you are closing a checking or a savings account.

How Much Does it Cost to Close a Bank Account?

If you do it the right way by following all the steps laid out in this article, it shouldn't cost you anything to close your account. But just to be safe, make sure you ask your old bank whether they charge an early account closure fee or any other type of fee for closing an account.

The only other way you might lose money closing a checking or savings account is if you forget to switch over an automatic payment and your closed account becomes overdrawn. That's why it's important to leave your old account open for at least a month to ensure all payments have switched over to your new account.

How Do I Close a Joint Account?

If you have a joint account with a partner, spouse or family member, you can still close the account using the same steps. The question of whether or not you will need the other account owner's permission depends on your state, but in general one owner can close the account without needing consent from the other owner.

However, unless you're a complete jerk, it's a good idea to give the other owner a heads up so that they can move any direct deposits or automatic payments to a different account and avoid missing a paycheck or getting charged for an unpaid bill.

What Should I Do With My Old Debit Card?

After you've closed your old account and have made sure that all your recurring payments and direct deposits have been transferred correctly, you need to dispose of your debit card. It's not enough to just cut it in half and throw it in the trash; you need to cut it into several pieces, both vertically and horizontally, and make sure you demagnetize the strip by running a magnet over it. 

You should also cut through the three-digit security code on the signature line on the back of your card to make sure it can't be read. To destroy the chip, you can cut it up or smash it with a hammer (a good idea if you are still feeling frustrated with your old bank and want to take out your anger on your debit card); just make sure you don't inadvertently hammer your fingers in the process!

Switching to a new  bank can seem daunting, but if you go about it the right way, it doesn’t have to be as hard as you think.

Ohio-based contributor Catherine Hiles writes about finance, cars, pet ownership and parenting for The Penny Hoarder