Planning a Bank Breakup: How to Close Your Account

Estimated read time: 5 minutes

Leaving your current financial institution can be a scary proposition. Anything related to moving your money around can be frightening.

No matter the reasons why you are changing banks, you have to do it properly to avoid costly fees, leftover funds, or hits to your credit report. The process of closing your old account is relatively simple, but there are factors you must consider and steps that must be taken.

New account first

The first step to closing your old account would be locating a new one. This new bank account needs to be set up and ready to accept funds before you can ever think of closing the old one. We want to avoid any money getting lost in the process, so we don't want to pull all of our cash out and then start looking.

Make sure this new account has all of the features you are looking for in a bank. We don't change banks often in our lives, so now is the time to make sure the move is right for your financial life. Search for accounts that offer interest, low or no fees, and maybe even a sign on bonus.

These perks will help to make your bank change worthwhile. You don't want to change and go to another bank anytime soon. With all of the variables in closing an account, you want to find the right bank and stick with them.

Don't lose track of deposits

Your current account has all of your direct deposits linked and feeding it. Once your new account is set up, you want to link these deposits with the new account. Make sure you have enough money in the old account to cover your upcoming expenses, but the transition to the new account starts here.

Try to get all of these steps done within a few days. The longer the transition period the more opportunity you will have to make a mistake. You have to track down every deposit source that you have and get them to deposit in the new account.

If you forget a direct deposit, and it goes to your old closed account, you may have to wait weeks to get that money back. Those funds will bounce off the old account and be in limbo until they figure out you have a new account elsewhere. Determine all of your deposit sources and get them the new routing and account number.


Once you have determined all of your income sources, it is time to figure where all of your money goes. The easiest way to do this is to take your most recent bank statement and find all of the recurring expenses you have. Look for subscription services and automatic payments.

All of these need to be moved over to the new account. Think of all the things that are automatically taken out of your account like Netflix, gym membership, or maybe utilities. It is critically important to get every one of these to avoid interruption of service or any fees that may be applied.

Take this time to review what is being taken out and why. You may find some subscriptions that you no longer use or want. This deep dive into your financials will give you perspective on where your money is going each month.

No More Withdrawals

After you have determined all of the automatic sources of withdrawal, you will need to stop using the old account for withdrawals or purchases. The point is we need to prepare to move the money to the new account, and we don't want to lose track of anything.

The more you use the old account while your deposits are pointing at the new account, the more risk you run of overdrawing the old one. It is not a pretty thing to leave an account in the negative when it comes time to close it.

Move Your Money

The biggest and most important step in the process is the actual moving of your money. At this point, you should be absolutely sure nothing more will be coming out of the old account. All of your new deposits are going into the new account.

A bank transfer is the easiest way to move your cash, but make sure there are no limits on this transfer from your old institution. Once all of the funds have been transferred and your account balance reads zero, it will be time to close the account.

Close The Old Account

Banks have different requirements when closing an account. Some may need it in writing that you would like the account closed. By in writing, we mean that you must physically stamp a letter and send it to them.

To avoid this hassle, you can go in person and sign a form at the bank. This will be the easiest way to make sure the account is closed and get that peace of mind. The old bank can provide a statement in writing that the account is closed and all funds removed.

This part is important because if for some reason the account does not get fully closed, you could accrue fees by leaving the account sitting empty. When it comes to your finances, check and double check to make sure.

Check For Other Accounts

This visit to the bank will give you the opportunity to ask if there were any other accounts in your name at your old bank. Sometimes banks will offer a linked savings account or similar accounts, like overdraft protection. Make sure you don't have money lying in these accounts and get them closed too.

It happens far too often that accounts are left unclosed and unclaimed. This money eventually gets turned over to your state. You want to avoid this situation, as it can be time consuming and difficult to get that money back. The process is not impossible, just a pain to deal with.

Follow up

Now that you have transitioned into your new account and closed the old account, it is time to do that double checking we talked about. Make sure all of your bills, deposits, and subscriptions transferred over with you. Make sure you have given thought to every obligation and income source.

You will need to destroy your old debit cards and checkbook. By destroy, we mean cut them into little pieces and dispose of them safely. We don't want that information to reach the wrong hands.

A Few More Tips:

  1. Do not forget your yearly expenses or deposits. Your tax return, whether you owe or are getting a refund, is tied to your old account.
  2. Make sure you have a savings account that you feed regularly. Savings are the cushion that help get us through any mistakes or issues we may have.
  3. Use all of the features your new bank offers. Whether it is overdraft protection, bonuses, or interest-bearing checking accounts, banks do a lot to keep you as a customer. Take advantage of these perks.
  4. A new account feels like a fresh start, so don't forget to double check where your money goes every month. It might be a great time to start budgeting.