How to close a bank account

Any number of reasons might prompt you to close a bank account, but there are a few important steps to take before you sever ties with your financial institution. Following the necessary steps for closing your account can ensure that no surprise charges show up when you move to a new bank.

Once you’ve gone through the checklist below, you’ll be able to leave your old account behind for good.

Closing a bank account checklist:

1. Open a new account. Most banks allow you to open an account online or in a branch location. You’ll need to have some documentation prepared for the application, including a government-issued ID, Social Security number and information from another bank account to transfer funds over.
2. Transfer or deposit money into the new account. Be sure to check whether your bank has any minimum deposit requirements to open the account. You may be able to deposit money by cash, check or a peer-to-peer payment service.
3. Set up new recurring transfers and direct deposits. Once you’ve listed all your automatic transfers and deposits, make sure to redirect them to your new account. This way, you won’t overdraw the old account or hold up any payments.
4. Check for any pending payments on the old account. Don’t forget payments on goods and services that haven’t yet been completed. You’ll need to confirm there are no pending payments before closing the account.
5. Update payroll information with your new account. Reach out to your payroll provider or human resources department with the updated bank information to ensure your paycheck is deposited into the new account. You’ll also need to update account information if you receive benefits, such as Social Security payments or unemployment insurance. This can be done at the respective agency’s website.
6. Close the old account. Once you’re certain there’s no more activity on the old account, you may close it online, over the phone or at a local branch. You’ll likely need to complete a closing request form and have it notarized. A notary should be available at the bank.
7. Ask for written confirmation of the account closure. The document will serve as proof that the account was closed so that you’re not held liable for any fees that may occur if the bank reopens it.

Can you close a bank account online?

If you’re not near a branch location, or would rather avoid a trip to the bank, some banks do allow their customers to close their accounts online. The option to close a bank account online will likely be found in the online banking portal after you log in to your account. If not, you may need to use the bank’s online messaging system to speak with an agent.

In some cases, customers may close their account by printing out a form from the bank’s website, filling it out and sending it to the bank by mail. That way, customers can still close their accounts even if they aren’t near any branches.

Closing a bank account for someone who has died

What happens to a bank account after the account owner has died depends on several factors, including whether it’s a joint account and whether a beneficiary is named. Generally, after the death of a sole account owner, the financial institution will close the account and release funds to either a beneficiary or an executor — the person designated to carry out the terms of the deceased’s will. But there are some important caveats to consider that could affect the process.

• Jointly held accounts

  If the account has joint ownership, check with the financial institution to make sure that it comes with rights of survivorship. Survivorship means that after the death of one account holder, such as a spouse, the account remains active under the other’s name. Most accounts automatically come with survivorship, but in some instances the institution may freeze the account if one account holder dies.

  In the case that the surviving signer is a secondary account holder, such as a child, the account will need to be closed. During the settlement process, the secondary holder may remove the funds before the account’s closure.

• Payment-on-death beneficiary

  An account holder may set their account as “payable on death” or “transferable on death,” so that the funds from the account will be paid out to a beneficiary. If you are the named beneficiary of someone who has died, you’ll need to inform the bank of the death by bringing in a copy of the deceased’s death certificate and your identification. The bank will transfer the funds to you and close the account. Any funds left in the account will be granted to the beneficiary regardless of whether the account holder made a will.
  

• When there’s a will

  If there’s no beneficiary named on the account, the next factor to consider is whether the account holder has a will. An executor is responsible for fulfilling the terms of the deceased’s will. Once remaining funds are taken out of the account and the account is closed, the executor will distribute the funds. The funds will first be used to pay any debts, with the remainder distributed according to the terms of the will.
  

• When there’s no will

  If there’s no will and no named beneficiary on the deceased’s account, the state appoints an executor who will manage the account funds. The executor will use these funds to pay off debts and then distribute the rest according to local inheritance laws. Typically, the money will go to the deceased’s spouse and/or children.
  

Bottom line

Getting confirmation of an account’s closure is the best way to ensure that no automatic transfers go through to the old account and result in unexpected fees. Also, review the terms and conditions of your savings or checking account. If you were offered a cash bonus to open the account you’re terminating, check the terms of the deal. If you close the account early, that money — which sometimes amounts to hundreds of dollars — could be forfeited.

“Read the fine print,” says Greg McBride, CFA, Bankrate’s chief financial analyst. “If you snagged a sign-up bonus when moving to your bank, they may reserve the right to claw some or all of it back if you close your account within a certain period of time.”

–Bankrate’s Sheiresa McRae Ngo updated this article.