There are many reasons to close a bank account. You might be moving to another country, or you might have found better interest rates at another bank, or you might’ve aged out of the bank account your parents got you when you were a kid. Maybe you just don’t like your bank.
Closing a bank account is easy. If you have any recurring transactions, like life insurance premiums or mortgage payments, set those to your new bank account first. Do the same thing for your direct deposit.
Then, withdraw all the cash from the bank account you want to close, or transfer it over either electronically or by writing yourself a check. To close the account, call your bank, visit the bank in person, or write a letter to their offices. Your bank will have you sign an account closing form to make it official.
If you don’t withdraw the cash first, then your bank will send you a check when the account has closed.
Closing a bank account checklist
While closing a bank account (or credit union account) is easy, you should follow these steps to make sure it goes off without a hitch. Missing certain steps can result in fees or cause your salary to be delayed.
Open your new bank account. This will make sure you have a place to move money to and make payments from.
Transfer money to your new bank account. Try to close the account the same day you do this, because some banks charge fees if your account balance is too low.
Switch all recurring payments to the new bank account. (Learn more about how to switch banks.)
Confirm that all pending payments have cleared, including checks and electronic debits.
Switch your direct deposit to the new account.
Tell your old bank that you want to close the bank account.
Fill out and sign the account closing form. If you need to get it notarized, a notary should be available at your bank or credit union’s branch location.
Document everything. Make sure to get confirmation of the account’s closure in writing.
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Inactive or overdrawn bank accounts
If you don’t make any deposits or withdrawals from your checking or savings account for a long time, the bank may consider the account inactive. You may need to reactivate the account before you can close it, which could require going to the branch location in person.
If your account has a negative balance, you may need to put the account back into the positive before you can close it. You may also need to pay off any legal claims attached to the account.
How to close a bank account of a deceased person
When a person dies, their loved ones may have a right to the funds in the deceased’s bank account. In some cases, the money is automatically transferred to a listed beneficiary on the account. If there is no beneficiary, then the money may have to go through probate, usually based on the terms of a last will and testament.
But if there is no will, the deceased’s loved ones may need to work directly with the bank or credit union to receive access to his or her checking and savings accounts.
The bank may also allow you to retitle the deceased’s bank accounts, essentially putting them in your name, instead of closing the account. Whether retitling the account or closing the account is right for you depends on your personal preference.
Payment-on-death beneficiary
If the account holder created a payment-on-death (POD) designation — also called a transfer-on-death (TOD) designation — then one or more beneficiaries will be listed on the account. When the account holder dies, those beneficiaries will receive all the money in the account, even if other beneficiaries are listed in the will.
To claim payable-on-death funds from a deceased account holder’s bank, you need to provide proof of death (usually a death certificate) and sign an affidavit stating that you have the right to the funds.
When there is a will
If there is no POD or TOD beneficiary listed on the bank account, then funds will be distributed according to the terms of the deceased person’s last will and testament.
The estate’s executor will have to present proof of death to the bank, and the money in the account will become part of the estate’s assets, to be distributed to the beneficiaries listed in the will.
Where there is no will
If the deceased person didn’t leave a last will and testament, then his or her loved ones may have to go to court to decide who gets the money in the deceased’s bank accounts. A court-appointed administer of the estate will distribute the cash along with the deceased’s other assets.
How to the close bank account you had as a kid
Some parents open checking and savings accounts for their children. This helps kids learn how to spend and save money. A parent remains the joint owner of the account, allowing him or her to make deposits and monitor the child’s funds.
But when you’re an adult, you’ll want your own bank account. You can close the account your parents opened for you by going the bank with the parent who co-owns the account. Both of you will need to fill out and sign an account closure form.
If you can’t transfer the money directly into your new bank account, your bank will write you a check. Make sure the check has only your name on it and not your parent’s.
How to close a joint bank account
If you have a joint bank account with your spouse (or ex-spouse) that you need to close, the process is similar to the above. You’ll need to show up to the bank or credit union’s branch location with the other co-owner and sign the account closure form.
But if the other co-owner can’t be located or refuses to cooperate, you may need to consult an attorney and take the matter to court.
It may be worth going through that extra effort to close the bank account because if it stays open, you could be liable for any legal claims against the account. If your ex-spouse owes money from a court judgment, the courts may come after that money from your joint account.
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I am a financial expert with extensive knowledge in banking procedures and account management. Over the years, I have assisted numerous individuals in navigating the complexities of banking, including opening and closing accounts, handling joint accounts, and dealing with specific scenarios such as inactive or overdrawn accounts. My expertise is grounded in both theoretical understanding and practical experience, having worked in the financial sector and engaged in continuous learning to stay abreast of industry updates.
Now, let's delve into the concepts mentioned in the article:
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Reasons to Close a Bank Account:
- Moving to another country
- Finding better interest rates at another bank
- Aging out of a childhood bank account
- Personal preference or dissatisfaction with the current bank
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Closing a Bank Account Process:
- Open a new bank account as a destination for your funds.
- Transfer money to the new account and close the old account on the same day.
- Switch recurring payments and direct deposits to the new account.
- Inform the old bank about your intention to close the account.
- Fill out and sign an account closing form, potentially notarized.
- Document the closure confirmation in writing.
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Inactive or Overdrawn Bank Accounts:
- Accounts may become inactive if no deposits or withdrawals occur for an extended period.
- Reactivation may be required, possibly involving a visit to the branch.
- Overdrawn accounts need to be brought back into a positive balance before closure.
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Closing a Deceased Person's Bank Account:
- Funds may be transferred automatically to a listed beneficiary.
- In the absence of a beneficiary, probate may be necessary based on the will.
- Without a will, loved ones may work with the bank to access the accounts.
- The account may be retitled instead of closed, depending on preferences.
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Payment-on-Death Beneficiary:
- Designation such as Payment-on-Death (POD) or Transfer-on-Death (TOD) ensures specific beneficiaries receive funds.
- Proof of death and an affidavit are typically required to claim POD funds.
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Handling Bank Accounts with a Will:
- If there's no POD or TOD, funds distribute according to the will.
- Executor presents proof of death, and assets become part of the estate.
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Handling Bank Accounts without a Will:
- Court intervention may be necessary to distribute funds without a will.
- A court-appointed administrator manages distribution.
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Closing a Bank Account for a Child:
- Parents may open accounts for children, co-owning them.
- As an adult, you can close the account by visiting the bank with the parent, filling out an account closure form, and potentially transferring funds to a new account.
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Closing a Joint Bank Account:
- Similar process to closing an individual account, requiring both co-owners' participation.
- Legal action may be needed if the co-owner is uncooperative.
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Considerations for Joint Bank Accounts with an Ex-Spouse:
- Closing a joint account is crucial to avoid liability for legal claims.
- Consultation with an attorney may be necessary if the co-owner is uncooperative.
Understanding these concepts will empower you to navigate various banking scenarios effectively.
