How to close a checking account in 6 steps

Young man at cafe on laptop considering how to close a checking accountImage: Young man at cafe on laptop considering how to close a checking account

In a Nutshell

Whether you’re switching banks or exploring new payment alternatives, closing an existing checking account doesn’t have to be complicated. Taking the right steps in the right order can help you close an account quickly and smoothly.
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Not all banking relationships last forever. At some point, you may be ready to trade in an old bank account for a new one with better features, lower fees or a higher interest-earning rate.

Overall, the process of closing a bank account is pretty straightforward: You withdraw funds and then request to close the account. But skipping a few steps in the process — such as updating your direct deposit and settling overdrafts — can cause headaches.

Here’s a list of steps to follow that can help ease the transition.



What are the steps to close a checking account?

Closing a checking account typically involves some paperwork and completing a series of tasks in a certain order.

1. Shop for a new bank account

Compare interest-earning rates (known as annual percentage yield, or APY), fees and minimum balance requirements across multiple checking accounts before choosing a new home for your cash. Dig into the fine-print details as well. Sometimes you must follow certain rules to avoid monthly fees, such as maintaining a minimum balance or setting up direct deposits — think about how realistic those rules will be for you when you’re considering a new account.

2. Open and fund the new account

Open a new checking account and deposit some money into it. You can typically fund the new account by setting up an external bank transfer from the old account.

3. Switch automatic deposits

If you set up direct deposits or other automatic deposits into your old bank account, transfer those deposits to the new account. Make sure not to skip this step. Otherwise, you could end up without cash to pay bills from your new account.  

4. Switch automatic payments

Before closing the old account, switch over any payments that were automatically coming out of it. You may be able to switch recurring payments through your bank accounts’ online tools, or you may need to work with the payee to make the switch.

5. Leave enough money in the old account for pending transactions

Perhaps a utility bill or your Netflix subscription payment hasn’t yet gone through for the month. Make sure there’s money in the old account to cover those transactions. This will ensure that your bills get paid so that you avoid overdrawing your account and paying overdraft fees.

6. Once transactions clear, you’re free to close

After all pending payments go through, you can withdraw any remaining balance and ask to close the account. The process of closing an account varies from one financial institution to another. You might need to call customer service, visit a physical branch or mail in a form.

Is the process different for closing a joint checking account or someone else’s account?

If you have a joint account with another person, the closure process might vary depending on your state and the account terms and conditions. Generally, since you’re both owners of the account, either of you may be able to withdraw funds and close the account without needing to get approval from the other.

That said, it still might be a good idea to give the joint account holder a heads up before shutting it down. If you’re a joint account holder on your kid’s account, the process of withdrawing money and closing the account will be similar since you’re also an account owner.

In the event of a death of a joint account holder, you’ll usually need to provide the person’s Social Security number and death certificate, and possibly legal documents that prove you have a right to transfer money and close the account. To help you manage affairs after someone passes, some financial institutions have checklists outlining the steps and documents you need.

Can I close an account that’s overdrawn?

It depends — banks have different requirements for closing an overdrawn account. In some cases, you might not be able to close the account until you pay the negative balance.

In other instances, the bank might choose to close the account without your permission because it’s overdrawn. This doesn’t mean you get off scot-free, though — the overdrafts on your banking history might show up on your ChexSystems report, which can affect your ability to qualify for a new account.

Plus, the bank or credit union could send your unpaid balance to a collection agency that reports information to the credit bureaus, which could negatively affect your credit scores.

What should I watch for when closing a checking account?

Comb through your bank statements to look for service provider auto-payments you may have forgotten about since these will need to be switched to the new account. Be sure to update your online payment method on sites like Amazon or PayPal with your new debit card as well.

Also, keep in mind that different financial institutions have different rules for how to close an account. You might have to call in, visit a location, fill out forms or mail in a written request that’s notarized. Call a customer service representative if you have questions and request a written confirmation when the account is closed.

Lastly, be aware that some financial institutions may charge a fee if you close an account within a certain number of days after opening the account. Check with your financial institution for any potential fees before closing the old account.

Will closing a checking account affect my credit?

Closing a bank account shouldn’t affect your credit if all goes smoothly. That’s because bank accounts don’t show up on credit reports and account closures aren’t counted in your credit score calculation.

But missed credit card or loan payments that occur while switching accounts could show up on your credit reports and hurt your scores, so make sure to update your payment method with each of your creditors. Make plans to settle negative balances before you move on. If the bank account issuer sends your balance to collections, that record could show up on your credit reports and stick around for up to seven years.


What’s next? Take care of your new checking account.

Once you close an account in good standing, it’s time to maintain the health of your new one. Set up paycheck direct deposits and consider sending automatic payments to your service providers so that you never miss a bill. Monitor your account balance regularly to avoid overdrafts.

And think about choosing a dollar amount, such as $300, $400, $500 or more, that you won’t let your account balance fall below to minimize accidental overdrafts. Establishing some of these banking habits can help you make maintaining a healthy bank account more automatic.


About the author: Taylor Medine is a freelance writer who’s covered all things personal finance for the past seven years. She enjoys writing financial product reviews and guides on budgeting, saving, repaying debt and building credit. … Read more.