A Step-by-Step Guide on How to Close a Checking Account

The Importance of Properly Closing a Checking Account

People change banks and checking accounts for all sorts of reasons. You may move to a new town where your previous bank doesn’t operate or find an account with better online banking features or more competitive rates and fees. Significant life changes like starting a new job, getting married, or having children may necessitate an account change. As your financial priorities evolve, so do your banking needs. (OK, maybe “It’s not you, it’s me” applies here.)

When that happens, it’s essential to understand the right way to close a checking account. It’s not complicated, but if you miss a step or two, you may run into some unnecessary headaches. 

Not to worry — we’re here to help. Follow this step-by-step process for closing a checking account.

1. Assess Your Finances

Before you close a checking account, conduct a careful review of your finances. Do you still have any deposits or payments scheduled with that account? What payment services or subscriptions are still connected to it? 

You don’t want to take out your money or close the account before you’ve adjusted these and moved them to your new account. It’s best to avoid any bounced checks or payment problems, but some can be especially painful. A canceled streaming service subscription is one thing, but a missed mortgage payment is another.

On the other hand, if your account is already overdrawn, you may need to deposit funds and pay any applicable fees before closing your account.

2. Contact Your Financial Institution

Your next step should be to contact your financial institution and find out precisely what you must do to close your account. This information may be available online, or you may need to call your local branch to find the necessary steps and documentation.

Can you close out the account online or in person? Will any joint account holders need to be present? How will the balance be paid out? These are all critical questions to ask to streamline the process and find out how to close a checking account.

3. Gather Necessary Documents and Information 

Each financial institution has its own requirements for the documentation needed to close a checking account. Some require you to fill out a form requesting account closure, but others can begin the process with a simple phone call or online request.

Regardless of the method, you’ll probably need to present your account number, full name, address, and Social Security number. You may need to present account closure forms signed by all account holders. Have all the information ready before you begin the process.

4. Cancel Automatic Payments and Transfers

Based on your financial assessment in step one, be sure to cancel any pending payments and transfers still tied to the old account. Ensure you have funds in a new account so you can transfer these payments or direct deposits over without any hiccups.

This step can take some time. Many mortgage lenders, for instance, require several days’ notice before they process a payment change. If you’re too late, you may need to ensure enough funds are present to complete your next scheduled payment before you close the account. 

Your employer may also need some time to process direct deposit changes. Don’t close your account before you’ve confirmed that your next deposit will go to your new bank.

5. Withdraw Remaining Funds

Now, it’s time to withdraw your remaining balance and finish closing the account. Before taking this step, however, reviewing any pending transactions one more time is a good idea. Make sure all automated payments are canceled and any outstanding checks have cleared.

Once you’re in the clear, you’re free to withdraw your remaining funds. Typically, you can do this via a direct electronic transfer into your new account or by writing a check to yourself to cash at your new financial institution. You can also write a check for “cash” and withdraw the money with a teller at your local branch.

6. Close the Account 

After you’ve emptied the account, it’s a good idea to close it promptly, especially if your financial institution charges any minimum balance fees. Otherwise, you may end up with a balance due before you can complete the process.

Submit any necessary forms and documentation, sign papers, and follow the protocol your financial institution outlined in step two. Finally, request written confirmation that your account is closed.

7. Monitor for Any Additional Charges

After officially closing the account, it’s still wise to watch your subscriptions and other regular payments or transfers to ensure there aren’t any charges or deposits you’ve missed. Any failed transactions could cause problems, and it’s easy to forget a few random retailers or services you don’t use regularly.

Sometimes, your old financial institution may even reopen your account if numerous charges or deposits come through after you’ve closed it. That could lead to overdrafts and other costly fees — the sooner you catch any mistakes, the better.

8. Update Your Financial Records

As a final step in the process of closing a checking account, take some time to update all your financial records with your new banking information. Record your routing and account numbers in a safe place, and be sure you link your new account to any savings accounts for easy transfers.

While you’re at it, you can finish the setup process for your new checking account. Order checks, register for online banking, and download the mobile app so you’ll be ready to use your new account without any interruptions.

9. Consider Alternative Banking Options

If you haven’t opened a new account but are ready to move, this is an excellent time to consider your banking options. Many fee-free checking accounts are available today, and many even pay interest.

Credit unions, in particular, offer a personalized experience with plenty of perks. Nearly everyone is eligible to join a credit union. If you do, you’ll be more than just a customer — you become a member who shares ownership and earns dividends based on how the credit union performs. 

These not-for-profit organizations put member interests first, and you’ll find competitive rates on savings, certificates of deposit, auto loans, and more. Credit unions are fully insured by the National Credit Union Administration (NCUA), so your funds are just as safe as in an FDIC-insured bank.

Further Resources on How to Close a Checking Account

When you change bank accounts, it’s a good idea to ensure you’re fully informed about your rights and any actions the bank can take. Check out these additional resources to help you prepare:

• Know your rights. If you run into any issues with your checking account, it’s helpful to understand your rights before you reach out to your financial institution.
  
• Act quickly. Banks and credit unions can consider your account inactive if there has been no activity for three to five years; at this point, they can turn your funds over to the state.
  
• Watch out for fees. Some financial institutions charge fees if you close an account too soon after opening it. Be sure to check your account terms for information before closing your account.

Find Your Next Checking Account

Closing a checking account may seem daunting, but it’s a simple process if you take the necessary precautions. By establishing a new checking account in advance and ensuring you’ve moved all your ongoing transactions out of your old account, you can avoid any fees or mishaps along the way.

Ready to make your next banking move? Check out our Credit Union Locator Tool to set up a new checking account with a friendly credit union near you.

Did You Know?

Credit unions offer more than just banking services — they’re also a way to give back to the community. Many credit unions offer financial literacy classes, invest in local businesses, and volunteer in the local area.