Personal Finance Advice

Bank accounts come and go, and not many people have the same checking account for their entire lives.  People move, find better interest rates with another bank, or just decide that the time has come to switch from a bank to a credit union  or vice versa.  There is no rule that says you have to keep your money in the same financial institution forever, and with so many different banks and credit unions offering competitive rates it’s a good idea to periodically review to make sure you’re getting the best deal for your money.

It’s a bad idea to simply stop using an account without actually closing it.  You might get charged inactivity fees or fees for falling beneath the minimum balance set for the account, and if you don’t realize that these fees are getting charged to your account you will be rudely surprised when you suddenly receive a statement demanding payment or your account will go into collection status.  Even worse, you might encounter a situation where you don’t realize these fees are piling up until years down the road when you try to apply for a loan and the delinquent item pops up on your credit report, dragging your credit score down and making it difficult to get approved for the loan at any decent interest rate.  This is not the best time to realize that you should have opened those letters your bank kept sending you long after you stopped using the account.

Take the time to close your account if you aren’t going to use it any more.  You can’t just pull your money out of an account and then assume that the bank will realize your intentions and close the account for you. 

How you close your account depends on the procedures set by the bank or credit union.  Some financial institutions accept a phone call request, but most banks and credit unions want to see the request in writing.  This is especially true if you are closing an account that has a substantial balance and your request includes the desire to have the money transferred to another account at a different bank or for the funds to go into a check that is sent to you.  This is a security issue for banks because they don’t want someone to pretend to be you in an effort to get their hands on your money, so don’t see any necessary extra steps as annoying.  The point is to find out exactly what you have to do to close the account officially.

Chances are you will be asked to go into a local branch and sign some paperwork before your account will be closed and any remaining balance will be released.  If you don’t live near a local branch or don’t have the capability to visit one, you will probably be asked to fax a signed request to close the account.  Financial institutions keep copies of signatures on file - even in this electronic age - so before they will close the account and send you the remaining funds they will reference your original signature from when you opened the account and make sure the signatures match.

If you don’t have access to a fax machine you may be able to talk them into accepting a scanned request that you e-mail, but some financial institutions are still relatively skittish about accepting requests this way and they may insist upon a fax.  Some financial institutions may require that the request is made via postal mail.  It all depends on the regulations of the bank or credit union.

Once you find out the method you need to follow to get the account closed, do exactly the same thing you were told.  If the bank needs a copy of your signature via fax, don’t e-mail your request.  If a phone call is not sufficient, find out what is.  Financial institutions can be very particular about how they allow people to close accounts, and some make it somewhat difficult - remember that you are taking away business from them, after all, so why should it be an easy process - but if you do everything they request then closing your account should not be a huge hassle.