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How to Close a Bank Account

Breaking up with your bank is much easier than ending a romantic relationship. But that’s not to say you should wing it. There’s a correct way to close a bank account, be it a savings or checking account, and a number of steps you need to take — including opening a new bank account — before officially saying goodbye.

Ready to get started? Here’s what you need to know to close your old account properly and start fresh with a new account.

Why Close a Bank Account?

One of the most common reasons to open a new account with a different bank is convenience.

Brick-and-mortar banks and credit unions might have their charms, but many lack the basic online banking capabilities most of us expect from our financial partners: mobile check deposit, fast person-to-person money transfers, seamless online bill paying, self-serve travel alerts and debit card locks, and more.

Taking advantage of everything brick-and-mortar banks have to offer means taking time out of your day to visit in person and speak with a teller — or maybe even make an appointment with a besuited banker, depending on what sort of help you need.

In-person banking is anything but convenient. And for many — like those of us who travel frequently for work or move long distances more often than the average person — it’s simply not workable at all.

Top online banks, make it easy to bank from anywhere at any time. CIT Bank’s mobile app and online account management tools completely reproduce the in-branch banking experience, minus the suits and handshakes.

Switching to an online bank like CIT streamlines the account closure process too. Getting started at your new bank is much easier when you don’t have to visit a branch to sign documents or make your first deposit.

Convenience isn’t the only reason to ditch your old brick-and-mortar bank for an online alternative. Without expensive branches to keep running and armies of bankers to pay, lean online banks can pass the savings along to their customers through higher account yields (interest rates) and lower loan rates.

How to Close a Bank Account and Open a New One

So, you’ve decided to close your old bank account and start a new banking relationship.

Follow these steps to complete the process and ensure you don’t leave any loose ends.

1. Open and Fund Your New Bank Account

Before you can close your old bank account, you need to open a new bank account. You’ll need it open to migrate payment information and balances from the soon-to-be-closed account.

Opening an online bank account is super easy. You’ll typically need to provide some basic personal information about yourself, such as your home address and phone number, electronically sign the account opening documents, and initiate funding to the new account. The whole process should only take about five minutes.

2. Switch Your Direct Deposits to the New Account

Once your new account is open and funded, you need to make sure it stays funded. Contact your employer and any other party that pays you by direct deposit to update your direct deposit “pay-to” account information.

You’ll need to provide the new account number and the financial institution’s routing number. Once confirmed, the change should take effect by your next scheduled pay date.

3. Switch Any Automatic or Recurring Payments to the New Account

Next, ensure that any recurring or automatic payments will come from the new account moving forward. These might include:

  • Credit cards
  • Utility bills
  • Rent or mortgage payments
  • Media or streaming subscriptions like Netflix, magazines, and so on
  • Gym memberships
  • Warehouse club memberships
  • Professional association dues
  • Transportation expenses, such as monthly parking or public transit passes

Log into each payment account and look for the old bank account number. Update it to the new account number and routing number and confirm that the payment is set to be an automatic transaction rather than one-time.

If you can’t remember every automatic payment you’ve set up, refer to bank statements going back 12 months. This will take some time, but it’s the best way to ensure no infrequent recurring payments — such as annual subscription payments or membership dues — fall through the cracks.

Ideally, complete this step two to three weeks before you’d like to close your old account. It can take some time for automatic payment changes to update on the payee’s end. You don’t want to incur late payment fees because a payee tried to draw from an empty or closed bank account.

4. Make the New Account Your “Pay-From” Account for Manual Payments

Next, make your new bank account your default “pay-from” account for any nonrecurring payments or transfers. Skip this step and you run the risk of attempting a payment or money transfer from an account that no longer exists.

To be safe, remove your old bank account number from all accounts and subscriptions that contain payment account information, even if you rarely use them.

5. Confirm That All Payments Pending From the Old Account Have Completed

Wait a couple of weeks and check your old account to confirm that any automatic or recurring bill payments pending from the account have been completed and that none are scheduled to recur in the future. Closing the old account while payments remain pending could cancel the transaction and expose you to late fees or worse.

6. Transfer All Funds Out of the Old Account

After confirming that no further payments are pending from the account, transfer the entire balance to your new account. Be warned: Some behind-the-times banks may still cut you a cashier’s check for the remaining funds. But in that case, you’ll have the opportunity to try out your new CIT Bank account’s handy mobile check deposit feature.

7. Sign and Notarize Account Closure Documents (if required)

Your old bank may require you to sign official account closure paperwork. In the worst-case scenario, where the bank requires notarization, you’ll need to visit a branch to do this.

However, most banks permit e-signatures and waive notarization requirements these days. If you’ve already moved out of the area, your old bank may not have a choice, or it may simply choose to forgo the paperwork altogether.

8. Get Written Confirmation the Account Has Been Closed

Ask your old bank for written confirmation that the account has been closed and won’t be reopened. Many banks mail former account holders letters to this effect, but it never hurts to ask.

You want to be able to point to something in writing should the bank erroneously reopen your account at some point in the future, which can happen if some long-forgotten payee attempts to draw on the account.

9. Verify That the Closed Account Is Closed

Finally, if possible, log into your old bank’s online bank portal and confirm that the account is no longer active. If you didn’t have online banking for your old account, the letter informing you of the account’s closure will have to suffice.

Special Considerations for Joint, Custodial, and Inactive Accounts

Closing a custodial account or joint account may require some additional work. The same may be true for inactive bank accounts.

Closing a Custodial Bank Account

If your parents opened a bank account for you as a kid, take a moment to thank them for teaching you how to save from an early age. Then, prepare to say goodbye to the account.

Closing a custodial bank account isn’t much different than closing an individual bank account, with one important exception: If they’re still alive, the account’s co-owner — your parent — will also need to sign account closure documents. Hopefully, e-signatures will suffice, but be prepared to find time to visit a branch with them if not.

If your old bank insists on cutting a bank check rather than transferring the remaining balance electronically, make sure the check is made out to you and not your parent. It’s your money now.

Closing a Joint Bank Account

Closing a bank account held jointly with a current or former spouse or domestic partner also requires two signatures.

If you’re still in the relationship or amicably parted, this is a straightforward matter. It gets more complicated amid a less-than-amicable divorce or separation when your partner’s opinion about what to do with the account — or who should control it — might differ from your own.

Ultimately, you may need to hash out these and other financial issues in a divorce settlement with help from your respective lawyers. In the meantime, open a new individual bank account, transfer any funds from the joint account that you can claim as your own, and update direct deposit and bill pay information so that you no longer need to rely on the old account.

Closing an Inactive Bank Account

If you haven’t used your bank account in a while, your financial institution might deem it inactive. Don’t worry — you can still pull your money out. You’ll just need to go through the trouble of reactivating it, which may involve signing another form or making an extra phone call.

The good news is, that if your bank asks you to come to a branch in person to reactivate an inactive account before closing it, you should be able to take care of both tasks on the same visit.

The bad news is, that if your account was overdrawn before lapsing into inactivity, you’ll need to deposit funds to get your balance back into the black.

Final Word

The process of closing an old bank account has an air of finality. After all, a properly closed bank account should be gone for good.

But closing an old bank account should feel like a new beginning too. It’s an opportunity to start a fresh relationship with a new financial institution, one that’s hopefully a better fit for your financial needs now and in the future.

Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he's not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.