How to Close a Savings Account

Closing a bank account is a quick process that often can be done online, at your local branch, over the phone, or by submitting a particular form. As your banking needs or financial situation change, you might find yourself needing to do this.

Sometimes people might close and move all their accounts to a different bank. But in other cases, you may want to maintain a relationship with your current bank and only close your savings account. Find out more about how this is done.

Why Close a Savings Account?

There are several reasons why you might decide to close your savings account. In some cases, you may be closing all your accounts with a particular bank. However, someone often wants to close only their savings account without fully severing ties with the bank.

Here are some reasons why you might close a savings account:

• You want to get a better interest rate on your savings.
• You have more than one savings account and want to consolidate them.
• You want to switch to an online bank with better mobile features.
• Your current bank charges fees on savings accounts that you want to avoid.
• You’re switching to a new bank altogether.

Steps to Close a Savings Account

Closing a savings account is usually a simple process. Here are the steps you’ll have to take:

1. Open a new savings account: If you don’t already have another savings account to move your money into, you’ll probably want to get one before you close your current savings account.
2. Transfer funds out of the account: Initiate a transfer from your current savings account to your new one (or an existing account where you’re moving the money). Depending on how you transfer the funds, this process could take several days.
3. Contact your bank: You’ll have to contact your bank to close your account. Depending on the bank you use, you may be able to visit a local branch, call customer service, send a letter, or close your account online.
4. Complete any necessary documents: In some cases, you may be required to submit a letter or form to close your bank account. For example, Bank of America requires a notarized letter to close accounts with balances of more than $25,000.
   

While the steps above are usually sufficient for closing an individual savings account, there are some special circumstances that may require additional steps.

Inactive Accounts

If you have a savings account that has become inactive or dormant—this may happen when you haven’t used it for a year or more—then it may be more difficult to close. Rather than simply being able to close the account, you may have to contact the bank to reactivate the account before you can move forward with closing it.

If you have no transactions with your account for three to five years, it may be considered abandoned or unclaimed. In this case, the account could be closed and any money in it sent to your state’s unclaimed property program.

Overdrawn Accounts

An overdrawn account is one that has a negative balance because you’ve spent more than you had in the account or accrued fees that brought your account to a negative amount. In most cases, you won’t be able to close an account with an overdrawn balance. Instead, you’ll have to bring the balance to zero and then can proceed with closing it.

Deceased Owner Accounts

To close the bank account of a deceased person, you’ll first have to prove that you have the authority to do so. It’s easiest to do this if you are listed as a co-owner on the account, as you’ll be able to have the deceased owner removed by showing a death certificate.

In cases where there is no co-owner listed in the bank account, you’ll probably need to provide a death certificate. You may also need a legal document to show that you’re the executor of the estate and have the authority to close the account on behalf of the decedent.

If the estate isn’t going through a formal probate process and doesn’t require an executor, you may be able to provide a small-estate affidavit in certain states.

Joint Accounts

A joint account is one that has more than one owner. Depending on your bank and how you’re closing the account, you may need both account owners to close it.

A bank may require that both owners be present if you’re closing the account in person. Or you may both need to sign the letter if you’re closing the account via mail. But in other cases, one account holder may simply be able to close the account without the other’s consent.

Custodial Accounts

A custodial account is one that an adult opens on behalf of a minor. The person who opened the account serves as its custodian and has full control of the account until the beneficiary reaches the age of majority (from 18 to 25, depending on the state).

Once you’ve deposited money into a custodial account, you can’t take it back. It’s an irrevocable gift to the child. Closing the account and moving the money into your own bank account could put you in legal trouble. However, you could move the money to a custodial account at a different financial institution. Additionally, if you are the beneficiary of such an account and have reached the age of majority, you can withdraw the money and close the account.

Because each financial institution has a different process for closing custodial accounts or transferring the funds, you’ll have to contact yours to start the process.

Tips for Closing a Savings Account

If you’re planning to close your savings account, there are a few additional steps that you should take once the account is closed.

Destroy Checkbooks or Debit Cards

If you have any checkbooks, debit cards, or ATM cards for the savings account that you’re closing, be sure to destroy them. You wouldn’t necessarily have to worry about someone finding and using them, but you can avoid accidentally writing a check or trying to use a card from an account that’s no longer active.

Download Your Bank Statements

Once your account is closed, you may not be able to access your old bank statements (though some banks keep them available for a certain number of days). Before closing your account, download previous bank statements in case you need to reference them.

Update Your Contact Information

Even when your account is closed, you want to ensure that the bank can reach you with important documents, including tax forms. Before closing your account, make sure your mailing address and other contact information are correct.

Update Your Automated Transactions

If you have any automated transactions set up, including direct deposits, scheduled transfers, or online bill payments, you’ll want to cancel those.

The best-case scenario is that the automated transaction simply won’t go through. But if you have direct deposit going into the savings account, you could experience a delay in receiving your paycheck. And if you use that savings account for bills, you could end up with a late fee when the payment can’t go through.

The Bottom Line

Closing a savings account is usually a simple process, but there are some circumstances that can complicate it. Whether you’re transferring the account to get a better interest rate, maintaining other accounts at the same bank, or switching all your accounts to a different bank, make sure you have a plan for your money. Be certain that all money has been successfully transferred to your new account before you close your existing accounts.