6-Step Checklist for Closing a Checking Account

Switching banks might make sense if you’re paying too many fees or your savings account interest rate isn’t high enough. Comparing checking accounts and opening a new one isn’t that difficult, but closing an old account can turn into a headache if you’re not careful. This checklist for closing a checking account can help you make the transition from your old bank to your new one as smooth as possible.

A financial advisor can help you create an investment plan to reach your goals.

When Should You Consider Closing a Checking Account?

You might consider closing a checking account if you’re paying high monthly fees or struggling to meet minimum balance requirements. Some banks charge maintenance fees, overdraft fees or other charges that can add up over time. If you find that bank fees are eating into your balance, switching to a low-fee or free account at another bank could save you money.

Another reason to close a checking account is if the bank doesn’t meet your needs anymore. For example, you may want a bank with better mobile tools, more ATM access or a higher interest rate on linked savings accounts. If you’ve moved to a new city or state and your current bank doesn’t have local branches, closing your old account and opening one at a nearby bank may offer more convenience.

You might also close a checking account to simplify your finances. If you’ve accumulated multiple accounts over the years, keeping track of them can be difficult. Consolidating your funds into fewer accounts can make managing your money easier and reduce the chance of missing payments or overdrawing an account.

Before closing an account, review automatic payments and deposits to avoid interruptions.

How to Close a Checking Account

Closing a checking account requires a few careful steps to avoid fees, missed payments or lost deposits.

1. Reroute Direct Deposits

Before you close your account, you need to have your paycheck and your other payments set up to be direct deposited into your new account. To make that happen, you’ll probably have to fill out a new form from your payroll department and update your routing and account number.

It might take time to process your paperwork, so keep an eye on your next check to make sure it goes to the right place.

2. Update Your Bill Pay Information

A businessman reviews how to close a checking account.

Putting your bills on autopilot can be convenient, but you could run into problems if you forget to change your account information when moving to another bank. If someone tries to deduct a bill payment after an old account is closed, one of two things could happen.

First, your old bank could reject it. Then you would have to make the payment from your new account, and a late fee could be tacked on.

Your old bank may instead reopen the closed account and allow the payment to go through. In exchange for covering the bill, the bank could tack on overdraft or insufficient funds fees.

In either scenario, you can lose money by forgetting to make sure all of your automatic bill payments have the right account details.

3. Wait for Deposits and Credits to Clear

When you have something that’s still pending in an account like a deposit, you’ll need to make sure it clears before you can close the account. If you forget about your pending transactions, you run the risk of getting hit with an overdraft fee or an insufficient funds fee if you don’t have enough money in your account to cover a payment.

4. Unlink Your Accounts

If you’ve linked your old checking account to a retirement, savings or investment account at another financial institution, make sure you change your information to your new account details. That’s particularly important if you have automated investments set up or you routinely have dividends transferred to your bank account.

5. Get It in Writing

You can close your old account once you’ve updated your information. If you haven’t transferred all of your money out of the account, you might be able to do it with a quick phone call. If not, you’ll have to make time to visit the bank in person. Either way, you’ll want to be sure to get a written statement confirming that the account is closed once you’ve cleaned it out.

6. Watch Out for Hidden Fees

Aside from potentially triggering overdraft fees, your bank could also charge you a separate fee just for closing the account. At many banks, this fee is standard practice if your account has only been open for a short period of time. That’s why it’s best to check out the old account’s fee schedule to see if there are any time restrictions.

Bottom Line

A woman reviews how to go about closing a checking account.

Moving your money from one bank to another can be a stressful time. You’ll need to reset your direct deposit, loan withdrawal payments, credit card payments and more. However, knowing how to effectively close and open a new account can be extremely helpful in the long run. On top of that, there are always new account offerings to review on the open market. You never know when it will be worth it to open a new account.

Banking Tips

Effectively managing your bank account balances can lead to a stronger financial outlook for the future. A financial advisor can help you with this. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area. You can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If you’re in the market for a new checking account, many new offerings include interest rates, cash back and other rewards-like perks. Check out SmartAsset’s list of the best rewards checking accounts to learn more.